ED Kicks Off Negotiated Rulemaking to Implement Changes to Federal Student Loan System

Last week, the U.S. Department of Education (ED) convened the Reimagining and Improving Student Education (RISE) committee to begin negotiated rulemaking (“neg reg”), a process ED uses to review, discuss, and hopefully reach consensus on proposed regulatory changes. This meeting was the first of two work periods for the RISE committee, which is focused on implementing the federal student loan borrowing and repayment provisions included in the recently enacted budget reconciliation law, the One Big Beautiful Bill Act (H.R.1).

The committee discussed topics including changing fixed and income-based student loan repayment plans, phasing out previous income-driven repayment plans, setting caps on student loan borrowing, and revising policies on loan rehabilitation, deferment, and forbearance. If committee members do not reach consensus at their second meeting this November, ED can formulate its own proposed rule. Whether or not consensus is reached, the Department intends to post the proposed rule before the end of the year, followed by a 30-day public comment period. The final rule is expected to be published in early 2026 and take effect on July 1, 2026.

The RISE committee negotiators included representatives from the following constituencies: student loan borrowers; legal assistance organizations representing students, consumer advocates, and civil rights groups; veterans’ organizations; state officials; student loan servicers; institutional leaders from the public, private nonprofit, and proprietary sectors; and organizations representing taxpayers and the public. ED serves as the federal negotiator who also participates in consensus votes.

ED rejected a request from the negotiator representing legal assistance organizations to add a seat to the table for civil rights advocates. The negotiator based her request on the fact that students of color, students with disabilities, and low-income students disproportionately shoulder the burden of student debt and are most vulnerable to predatory practices in higher education, and excluding a dedicated representative of the civil rights community meant the committee lacked an expert to give voice to those experiences and weigh in on the proposed regulations’ compliance with civil rights laws. The Department also did not include a representative for financial aid administrators, as it has in the past, even though those individuals will likely be responsible for ensuring institutional compliance with many parts of the law, including the changes in borrowing limits.

On the first day of negotiations, ED announced that there would be no opportunity for public comments at the close of each day, a change from the standard practice at all recent neg regs. Removing the public comment period limited an important opportunity for negotiators to hear directly from members of the public, including students and student loan borrowers themselves, during negotiations. Although ED accepted public comments on the rulemaking topics before neg reg began and will accept written public comments after it publishes its proposed regulations, ED restricted the public’s ability to inform negotiators of their concerns in real time.

The RISE committee continued its work despite the government shutdown that began on October 1, the third day of neg reg. During the first week of negotiations, negotiators refined ED’s proposals on the issues below.

Fixed Loan Repayment Plans

The reconciliation law collapses the three currently available fixed repayment plans (standard, extended, and graduated) into one plan (tiered standard) for loans disbursed on or after July 1, 2026. Borrowers without loans disbursed on or after July 1, 2026, will retain access to existing standard, extended, and graduated plans. The new tiered standard plan requires fixed monthly payments over different repayment terms determined by the amount a borrower owes when entering repayment. Borrowers with higher balances have longer repayment terms. The repayment terms under the new tiered standard plan are below.

New Tiered Standard Plan Repayment Terms

ED’s proposal reflects the changes to fixed repayment plans outlined in H.R.1 without significant modifications. Based on feedback from negotiators representing state officials, student loan servicers, and legal assistance organizations, ED clarified within the regulatory text that continued eligibility for standard, extended, and graduated is based on the date of loan disbursement, not the date at which a borrower enters repayment. During a non-binding pulse check used to gauge whether negotiators are close to consensus on proposed text, all negotiators gave language on fixed repayment plans a thumbs up, indicating the committee is likely to reach consensus on these provisions at the next meeting.

Income-Driven Repayment Plans

H.R.1 dramatically overhauls income-driven repayment (IDR) plan options. For borrowers with loans disbursed on or after July 1, 2026, it replaces existing IDR plans with the new Repayment Assistance Plan (RAP). Borrowers with direct loans or direct consolidation loans disbursed before July 1, 2026, must shift from one of the current income-contingent repayment plans (ICR, PAYE, REPAYE, SAVE) into a non-income-based fixed repayment plan, the new RAP plan, or a modified version of the two existing Income-Based Repayment (IBR) plans.

ED opened discussion on changes to repayment plans with a comparison of the modified IBR plans available to current borrowers with the new Repayment Assistance Plan. Per the reconciliation law, the Department’s regulatory proposal removed the requirement that borrowers demonstrate partial financial hardship to access IBR. The negotiator representing consumers and taxpayers raised concerns that although the phrase “partial financial hardship” was struck from the regulatory text, the concept remains present under the new “applicable amount” calculation used to determine borrower’s payments. ED declined to make changes to its proposal based on this comment at the table, though the Department may propose further clarifications to the “applicable amount” regulatory text before the second work period.

In response to questions from negotiators representing consumers and taxpayers and legal assistance organizations, ED clarified that borrowers eligible for IBR may move freely between IBR and RAP even following the sunsetting of other ICR plans on July 1, 2028. However, ED interprets existing statute to require borrowers with eligible PLUS loans seeking to enroll in IBR before that deadline to first enroll in ICR, make one payment, and then enroll in IBR. In a pulse check on the IBR changes, all negotiators but the student loan servicer representative gave a thumbs up; the servicer negotiator gave a sideways thumb, indicating he needs more feedback from his constituency on how they would operationalize the proposed changes.

Negotiators also discussed ED’s proposals to implement RAP, which closely aligned with statutory language. RAP calculates a borrower’s monthly payment based on their adjusted gross income and family size, discharges any remaining debt after 360 qualifying payments (30 years’ worth), and includes subsidies to ensure a borrower making on-time payments will see their principal balance decrease and avoid ballooning interest.

Although neg reg cannot alter the terms of RAP set forth in law, negotiators sought clarification from ED about how the plan’s rollout might impact borrowers, particularly those enrolled in IDR plans subject to ongoing legal challenges. The negotiator representing legal assistance organizations shared concerns that ED’s proposed text did not explicitly state that payments made through the REPAYE and SAVE plans, which are currently enjoined in court, will count toward eventual forgiveness under RAP. While ED confirmed that qualifying payments in the enjoined plans will count toward forgiveness, they remained firmly opposed to referring to REPAYE and SAVE in the regulation because of the possibility that the court may strike the plans down entirely.

Following an alternate proposal from the legal assistance and public institution negotiators, ED removed all references to existing plans from their proposal to clarify that qualifying payments on any income-driven plan prior to their sunsetting in 2028 will count toward forgiveness under RAP regardless of the court’s decision.

While most negotiators gave the proposal a thumbs up following this change, negotiators representing student loan servicers, legal assistance groups, and veterans expressed continued reservations and the need for additional clarity on the treatment of borrowers in forbearance while enrolling in a new plan.

Miscellaneous Loan Repayment Provisions and Public Service Loan Forgiveness

The proposal requires borrowers with Direct Loans disbursed before July 1, 2026, who are in repayment plans that will be phased out to transition to an eligible plan (IBR, RAP, or the standard plan) by July 1, 2028, or be automatically moved into the standard plan. Borrowers with loans disbursed on or after July 1, 2026, who do not select a plan will automatically be placed in the new tiered standard plan.

The proposal clarifies that borrowers with Parent PLUS loans or consolidation loans that include a Parent PLUS loan must repay those loans under the tiered standard plan, separate from other Direct Loans. For borrowers pursuing Public Service Loan Forgiveness (PSLF), eligibility will be limited to those enrolled in either ICR or RAP. Additionally, borrowers with loans in default will be allowed to reenter repayment through RAP.

Loan Limits

Beginning on July 1, 2026, the reconciliation law sets new annual, aggregate, and lifetime borrowing caps across federal student loans. All borrowers, excluding Parent PLUS loans, will be subject to a lifetime borrowing maximum of $257,500, though current borrowers enrolled in a program before June 30, 2026, will be exempt from the new limits for three years. Graduate student borrowing will be capped at $20,500 per year, with an aggregate borrowing limit of $100,000. Professional student borrowing will be capped at $50,000 per year, with a $200,000 aggregate borrowing limit. Parent PLUS program borrowers will be limited to $20,000 per year for each dependent student, with an aggregate limit of $65,000 per student. The current Parent PLUS program allows parents of dependent undergraduates to borrow up to the full cost of attendance each year. The reconciliation law also eliminates the Direct PLUS loan program for graduate and professional students starting on July 1, 2026.

Negotiators raised concerns about how loan limits would apply to joint degree programs. In response, ED proposed language that clarified for joint degree programs (e.g., M.B.A./J.D.), the professional borrowing cap would apply if more than 50 percent of the credit hours count toward the professional credential. The Department is seeking negotiators’ feedback on whether the more than 50 percent threshold is appropriate for determining when the professional degree loan limit applies and will revisit the issue in the second session.

The Department followed the current regulation’s definition of a graduate student, defined as “a student enrolled in a program of study that is above the baccalaureate level and awards a graduate credential (other than a professional degree) upon completion of the program.” A professional degree is defined as “a degree that signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that normally required for a bachelor’s degree, where professional licensure is also generally required.”

The current regulation states that qualifying professional degrees include Pharmacy (Pharm.D.), Dentistry (D.D.S./D.M.D.), Veterinary Medicine (D.V.M.), Chiropractic (D.C./D.C.M.), Law (LL.B./J.D.), Medicine (M.D.), Optometry (O.D.), Osteopathic Medicine (D.O.), Podiatry (D.P.M./D.P./Pod.D.), and Theology (M.Div./M.H.L.). Negotiators urged the Department to add additional degrees such as clinical psychology, but ED clarified that changes to the statutory list would require a separate rulemaking process. However, ED proposed adopting an interim definition of a professional degree in addition to the criteria above, effective through June 30, 2027. Under this definition, a professional degree would be one that existed as of July 4, 2025, for which students received Title IV funds during the 2024–2025 academic year, and that was designated as a professional degree by the institution on or before July 4, 2025.

Under the proposal, institutions would be permitted to set lower annual loan limits, as long as they apply the policy consistently across programs and communicate it clearly to students and families. ED proposes requiring institutions to reduce loan amounts for students enrolled less than full-time, using the following formula:

This proposed loan reduction schedule sparked contention among negotiators, who argued that the formula could create confusion for financial aid administrators. Negotiators’ concerns centered on the difficulty of determining loan amounts based on students’ intended enrollment status and the complications that could arise if a student adds or drops a class, thereby changing their enrollment level. In response, ED decided to table the discussion and revisit the issue during the second session.

Another issue raised by the legal aid representative was whether institutions should be prohibited from partnering with private lenders to steer students toward private loans once they reach their federal borrowing limit. ED declined this amendment, explaining that it lacks the legal authority to regulate private lending since it falls outside of Title IV of the Higher Education Act. Advocates and researchers are sounding the alarm that the proposed loans caps on graduate and professional degrees could push low-income students to the private lending market to fill the gap. Private loans often carry higher interest rates and lack the income-based repayment and relief options available to federal borrowers. Low-income individuals also face barriers in securing private loans due to income and credit requirements, which could impede their ability to enroll in a program or finish a degree.

Loan Rehabilitation, Deferment, and Forbearance Provisions

The reconciliation law made several major changes to loan rehabilitation, deferment, and forbearance policies, effective July 1, 2027. Borrowers would be allowed to rehabilitate their Direct, FFEL, and Perkins Loans twice, rather than the current one-time allowance. Negotiators urged ED to allow borrowers to begin rehabilitation nine months prior to the July 1, 2027, date to allow time for the required 9 out 10 consecutive monthly payments. The Department believes that second rehabilitations cannot occur prior to the effective date. Before July 1, 2027, borrowers rehabilitating a Direct Loan must make monthly payments of at least $5, but beginning on or after that date, the minimum payment will increase to $10.

The reconciliation law also sunset economic hardship and unemployment deferments and limits the total period borrowers may receive general forbearances for Direct Loans disbursed on or after July 1, 2027, to nine months within a 24-month period. Negotiators pressed ED to clarify whether time spent in administrative forbearance while a borrower’s repayment application is being processed would count against the new limit. ED confirmed that these general administrative forbearances, applied while a servicer processes an application, will not count toward the new forbearance cap.

Next Steps

The Department allowed negotiators to submit proposed amendments until October 10, 2025, and will circulate revised regulatory text to negotiators, likely in the week before the next session. The full committee will reconvene for its final work period on November 3-7, 2025, to further discuss these issues and vote on ED’s proposals.

ED will also be convening a separate rulemaking panel, the Accountability in Higher Education and Access through Demand-driven Workforce Pell (AHEAD) committee, which will meet in December 2025 and January 2026.

To view materials provided to the committee and the public, visit the Department of Education’s negotiated rulemaking website.