New US education department rules cut student tuition and simplify loans: What to know about repayment caps

The US Department of Education has issued a proposed rule designed to reduce higher education costs and simplify federal student loan repayment under President Trump’s Working Families Tax Cuts Act, according to an official press release from the US Department of Education.

The Notice of Proposed Rulemaking opens a 30 day public comment period and follows congressional changes intended to curb overborrowing, introduce graduate loan caps and streamline repayment options for borrowers, the department said in an official press release from the US Department of Education.




Graduate and professional loan caps

The proposed rule would eliminate the Grad PLUS programme and introduce annual and aggregate borrowing limits for graduate and professional students. Graduate students would be limited to $20,500 per year with a $100,000 lifetime cap, while professional students would face $50,000 annual limits and $200,000 aggregate caps beginning in July 2026. These measures are intended to address rising tuition driven by unlimited borrowing, the department explained in an official press release from the US Department of Education.

Institution level borrowing controls

Under the proposal, colleges and universities would be permitted to set programme level loan caps below statutory limits. The department said this flexibility would allow institutions to align borrowing with actual programme costs, particularly for courses with lower earnings outcomes or higher default rates, according to an official press release from the US Department of Education.

Simplified repayment plans

The proposed rule would phase out multiple existing repayment options and replace them with two choices: a tiered standard plan and a single income driven repayment plan known as the Repayment Assistance Plan. The standard plan would offer fixed repayment terms of 10, 15, 20 or 25 years based on loan balances, while the income driven option would tie payments to earnings and prevent balances from growing for low income borrowers, the department said in an official press release from the US Department of Education.

Support for borrowers in default

Borrowers in default would be given a second opportunity to rehabilitate their loans under the proposal. Previously, borrowers were limited to one rehabilitation attempt, but the department said the change would help individuals return to good standing and resume repayment, as outlined in an official press release from the US Department of Education.

Rulemaking process and next steps

The proposed rule represents one of three regulations to implement changes to the Higher Education Act. The department said consensus was reached by the RISE Committee, which included students, taxpayers and institutions, according to an official press release from the US Department of Education. Comments close by March 2, 2026 there.Ready to navigate global policies? Secure your overseas future. Get expert guidance now!