Department of Education Finalizes Loan Limits and Repayment Plan Changes

The U.S. Department of Education published its final rule implementing the student loan provisions of the Working Families Tax Cuts Act, ending Grad PLUS for new borrowers, capping Parent PLUS for the first time, narrowing the definition of "professional student", and consolidating the federal repayment system into two plans for new borrowers.

Most provisions take effect July 1, 2026, with rehabilitation and deferment changes following on July 1, 2027, and the legacy income-contingent plans fully sunsetting on July 1, 2028.

The 647-page rule (PDF File) follows a negotiated rulemaking process that opened in late 2025 and drew more than 80,000 public comments. The Department says the package will save taxpayers $409 billion and reduce student debt by $224 billion by curbing over-borrowing.