Five Take-Aways From the Department of Education’s Student Loan Rulemaking

On November 6, a day earlier than expected, the Department of Education concluded the Reimagining and Improving Student Education (RISE) Committee, a series of negotiated rulemaking sessions focused on implementing the student loan-related provisions of last summer’s reconciliation package (the One Big Beautiful Bill Act or OBBBA). As it rushed to finish, the committee reached consensus on wide-ranging regulatory text, including language that clarified:

• The roll-out of new loan limits for graduate and professional students, those attending less than full-time, and parent borrowers;
• The ability of institutions to limit loans for student and parent borrowers in specific programs of study;
• The integration of new repayment plans into—and the elimination of some existing plans and types of deferment from—the student loan environment; and
• Modifications to the structure of forbearances and loan rehabilitation provisions (for those working to exit default).

The Department must now meet an aggressive implementation schedule to enact a number of provisions in OBBBA slated to take effect on July 1, 2026. First, because negotiators reached consensus, their agreed-upon language will be reflected in a Notice of Proposed Rulemaking (NPRM), expected in early 2026. And then the Department is required to consider public comments—generally open for at least a 30-day period—on that NPRM before issuing a final rule. Colleges, contractors, community partners, and the Department itself must simultaneously work to update systems, processes, and communications to students and borrowers.

The provisions in OBBBA and this set of forthcoming regulations make significant changes to how both the front end and the back end of the loan system work. Students and borrowers will now have different options for funding higher education and for repaying their loans once they leave school. As a result, implementation will be an enormous undertaking, made more challenging by a lack of staff, uncertainty around future staffing arrangements, and at least one other high-priority OBBBA rulemaking coming down the pike.

This piece highlights five key take-aways from the RISE committee that underscore the complexity of the implementation process; the stakes for students, borrowers, and colleges; and what we still do not know going into 2026.

Perhaps the biggest-ticket item on the agenda, at least for the institutions around the table, was codifying the definition of a graduate versus a professional degree. Starting on July 1, 2026, students attending graduate programs will have annual loan limits of $20,500 and aggregate loan limits of $100,000 while those enrolled in programs that award a professional degree will have limits of $50,000 and $200,000. The previous Graduate PLUS loan program—which allowed borrowing up to a student’s cost of attendance—will no longer be available for new borrowers.

OBBBA took the unusual step of defining a professional degree using an existing regulation as it was in effect on the date the bill was enacted—July 4, 2025. In that regulation, a professional degree includes but is not limited to “Pharmacy (Pharm.D.), Dentistry (D.D.S. or D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C. or D.C.M.), Law (L.L.B. or J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M., D.P., or Pod.D.), and Theology (M.Div., or M.H.L.).” The definition posed a challenge for the rulemaking committee: If professional degrees were not limited to those 10 fields, which other fields would it include?

After initially proposing its own definitions that both limited professional degrees to the 10 fields listed above and included a one-year interim period that would include a greater array of programs—as well as a more expansive proposal from some of the negotiators—the Department ultimately drafted a multi-part rubric to determine who is eligible for higher loan limits. In the Department’s final language, a professional degree:

• Includes the 10 fields listed above and Clinical Psychology (including a Psy.D. or Ph.D.); AND
• Includes any other program that is in the same four-digit Classification of Instructional Programs (CIP) code (a structure for coding and reporting fields of study and programs in the higher education space) as those 11 fields, primarily broadening the psychology programs that qualify; AND
• Is at the doctoral level, requiring 6 years of higher education, including at least two at the post-baccalaureate level; AND
• Requires professional licensure.

The Department indicated that the set of 4-digit CIP codes included in the definition would include 47 percent of current doctoral-level students and 4 percent of those unique programs. However, the actual number of students qualifying for expanded loan limits will be lower given the other requirements in the Department’s multi-part test.

While the definition of professional degree is now clear, how this will play out for students and schools—especially given the variety of other regulations in the pipeline and the likelihood that the Department will face lawsuits—remains less certain. As analysis has shown, this new regime will potentially push a number of students toward other ways to pay for school, including borrowing on the private market, limiting opportunities for those not able to secure financing and creating an environment ripe for growth in alternative loan products. These changes will also undoubtedly push institutions to rethink how they price, finance, and structure programs; some are likely to call for delays implementing these provisions and for Congress to make changes to OBBBA, especially to classify additional programs as professional.

In addition to new loan limits for those at the graduate level, as noted above, OBBBA also set new loan limits for parents borrowing on behalf of dependent undergraduate students (previously limited only to the cost of attendance of their school, but now capped at $20,000 annually and $65,000 in the aggregate per student). The new law also requires the proration of loan limits for students at the undergraduate and graduate levels attending less than full-time, and it allowed institutions to limit loans for specific programs of study.

For graduate students and parent borrowers, the new loan limits come with a phase-in period that allows those who are enrolled and have taken out a Direct Loan for their program to continue to access currently available loans for up to three years. (Undergrads must generally stay within their degree or certificate program to qualify.) While the phase-in period is intended to help those who have already started a program under the existing limits finish it, it does not include any phase-in period or implementation delays for current students who are enrolled at a less than full-time status or those affected by new program-level loan limits set by institutions. These groups will face their new, prorated or institutionally set loan limits starting in July 2026, not only potentially throwing a wrench into their plans but also complicating things for financial aid professionals who have to track and explain two different implementation regimes for current borrowers. While there is support for aligning phase-in periods across the board, the Department has indicated that it believes OBBBA requires immediate implementation of the prorated limits.

The phase-in period does, however, cover the higher loan limits currently available to high-cost programs. In the mid-1990s, as the Health Education Assistance Loan (HEAL) Program was ending, Congress included a separate loan authority in the Higher Education Act (HEA) that permitted the Secretary to provide higher loan limits for specialized training that lead to high-cost education programs. The Department has historically limited these increased limits to health programs. During the RISE committee, the Department indicated that it interprets OBBBA as limiting this authority (although the authority remains separate in the HEA) except that these higher limits would be included in the phase-in period for graduate and professional programs. The Department plans to release a Dear Colleague Letter in the coming months clarifying the extension before ending the practice of providing these higher loan limits.

Once borrowers leave school, they will enter repayment in a new regime. OBBBA sunsets some of the existing income-driven repayment plans in 2028 and creates two new plans: the income-driven Repayment Assistance Plan (RAP) and the tiered, standard fixed payment plan. Current borrowers will gain access to RAP and remain able to move among existing income-driven plans and RAP as long as they do not take out new loans or consolidate their existing loans on or after July 1, 2026. Anyone who borrows or consolidates on or after this date will only be eligible for RAP or the tiered standard plan.

Since RAP is only available to borrowers with Direct Loans, the Department indicated that those who still hold loans from the now-defunct Federal Family Education Loan (FFEL) Program will still able to pay their FFEL Program loans in an income-driven plan (specifically the Income-Based Repayment plan) after July 1, 2026 even while paying any Direct Loans in RAP. However, new Parent PLUS borrowers (those borrowing or consolidating after July 1, 2026) will no longer have access to income-driven repayment plans. They are only eligible to repay these loans on the tiered, standard plan, which does not qualify for Public Service Loan Forgiveness (PSLF).

While much of the regulatory text related to repayment plans mirrors what is included in OBBBA, the Department made a few notable changes to its original proposals. First, it eliminated the marriage penalty originally included in the RAP plan, wherein each borrower in a couple that was married and filing taxes jointly (MFJ) was required to pay an amount based on the couple’s combined income. (Borrowers who were married filing separately would have their payments separately calculated.) Instead, the Department aligned payments for MFJ borrowers with how they already make payments on other, current income-driven plans. These plans allow MFJ borrowers to make a total, combined payment that equals the amount required by their combined income. Each borrower is responsible for an amount proportional to their own debt. This ensures payments are reasonable and families are not encouraged to file separately when they otherwise would not (increasing paperwork burdens on both families and the IRS).

Second, the Department defined payments in RAP differently than they are in other, current income-driven repayment plans. OBBBA specifies that a “qualifying monthly payment” in RAP is an “on-time applicable monthly payment” (emphasis added). The Department indicated that, as a result of that statutory language, it was defining an on-time payment in RAP to be one that is “received on or before the due date for the current month, but after the due date for the previous month.” This narrower definition affects borrowers’ access to a host of existing benefits in the student loan system.

For example, according to the Department, periods of deferment and forbearance while a borrower is in RAP cannot be bought back later through the existing “buy back” program because a monthly “payment” is not being made, and periods spent in deferments and forbearances that are allowed to count toward other income-driven plans will not count toward RAP. (Payments made in an economic hardship deferments will count toward RAP but not toward PSLF for borrowers enrolled in RAP.) This reflects a different way of tying deferments and forbearances to specific repayment plans than has typically been done in the past.

In addition, at the end of the RISE negotiations, the Department included a provision to allow those who make lump sum payments of more than their monthly payments (such as those who pay ahead or use AmeriCorps or Peace Corps transition payments) to receive credit for up to a year toward income-driven repayment forgiveness and PSLF depending on their lump sum payment amount. If borrowers pay in advance, they are typically put in “paid ahead” status and the due date of their next bill is pushed forward. If these borrowers opt out of advancing their due date and continuing to make separate monthly payments, these payments would be eligible for the principal and interest subsidies available to some borrowers enrolled in RAP. Otherwise, those paying in advance would not qualify for the subsidies because their early payments would not be considered on-time, monthly payments. A borrower who makes payments while in a paid ahead status would also not receive these benefits.

OBBBA allows borrowers to rehabilitate their loans twice, providing a critical additional pathway out of default. Currently, borrowers are limited only to a single rehabilitation of their defaulted loans. It also sets the minimum payment for a rehabilitation agreement at $10 for future borrowers to match the new minimum payment required in RAP.

While the Department declined to change its rehabilitation-related regulations beyond these measures, it committed to clarifying and improving its existing practices around rehabilitating a defaulted loan in the preamble of the final regulations. These clarifications and improvements include ensuring the ability to consent to FUTURE Act data sharing—which makes it easier for borrowers to enroll and annually recertify for income-driven plans—in rehabilitation applications, facilitating additional self-service options for borrowers in default, and smoothing the pathway into an income-drive repayment plan when borrowers exit default. (Those who enroll in income-driven plans are less likely to default or redefault on their loans.)

Borrowers and students are already making plans for the 2026-27 academic year and even with consensus, the final regulations still are months away from being settled. And more changes are coming. During the RISE committee, the Department used a 2023 regulation as the base for all changes, given that it is the current rule of record. But pieces of this rule related to the Saving on a Valuable Education (SAVE) repayment plan are subject to lawsuits and court actions, and the Department declined to touch language in the regulations related to the SAVE repayment plan—even intimating that the lawsuit may be resolved soon. After a court decision (or a settlement), changes will need to be made to the existing regulations to reflect that ruling.

This regulatory package includes provisions that reconfigure how loan origination and repayment work for borrowers, schools, the Department, and its contractors. The fact that so many pieces of the system are changing at once—and so quickly—makes it not only hard for schools and the Department to plan and get systems set up but also for students and borrowers to understand their options, eligibility, and path forward. For example, there are specific pieces of the new package that may come as a surprise—including the immediate implementation of the new prorated limits for less than full-time students or the fact that some schools may limit loans for specific programs of study. In addition, current Parent PLUS borrowers may want to consolidate their loans before July 1, 2026 to ensure they maintain access to income-driven repayment plans. Their consolidation applications must be fully processed and new consolidation loans must be made by this date, which means they will need to file their applications weeks or months in advance.

Thus, even after the new rules are finalized, robust communication and training across multiple channels will be needed to ensure a smooth rollout over the coming months and years. Things are likely to get more complicated—at least in the short-term—before they become more streamlined, a laudable goal that has eluded the student loan system over the last decade.