The U.S. Department of Education has released a Notice of Proposed Rulemaking (NPRM) titled “Reimagining and Improving Student Education,” introducing potential changes to federal student loan programs. The proposal represents a significant shift in loan policy, with a focus on reducing tuition-related borrowing and simplifying repayment options for borrowers.
According to the department’s rulemaking announcement, the proposal centers on lowering costs, improving repayment clarity, and providing additional pathways for borrowers to maintain or regain good standing on their loans.
Key Provisions of the Proposed Rule
The NPRM outlines several policy changes across three primary areas.
Elimination of Grad PLUS and New Loan Caps – The proposal would eliminate the Grad PLUS program, which previously allowed graduate and professional students to borrow up to the full cost of attendance. In its place, the department proposes new annual and aggregate borrowing limits:
- Graduate Students: $20,500 per year, with a $100,000 aggregate limit.
- Professional Students: $50,000 per year, with a $200,000 aggregate limit.
The proposal would also allow institutions to set program-level borrowing caps below statutory limits. According to the department, this change is intended to align borrowing with the true cost and earning potential of academic programs and reduce the risk of overborrowing in programs with lower earnings outcomes or higher default rates.
Simplified Repayment Plans – The proposed rule would phase out several existing repayment options in favor of two primary plans designed to reduce borrower confusion:
- Tiered Standard Plan: Fixed repayment terms of 10, 15, 20, or 25 years, depending on the borrower’s loan balance.
- Repayment Assistance Plan: A streamlined income-driven option that would prevent loan balances from growing through negative amortization, provided borrowers make on-time payments.
Second Chance at Rehabilitation – Borrowers currently in default would be offered a second opportunity to rehabilitate their loans and return to good standing. Under current policy, loan rehabilitation is typically a one-time benefit.
Public Comment Period
The Department of Education is accepting public comments on the proposed rules through the Federal eRulemaking Portal. Comments must be submitted on or before March 2, 2026, and should include Docket ID ED-2025-OPE-0944. Additional instructions for submitting comments are available on Regulations.gov under the site’s FAQ section.
Author: Jennifer Evancic
Jennifer.Evancic@ResourceManagement.com
Jennifer Evancic is a third-party auditor valued by creditors and large organizations for her knowledge in call monitoring within the collections industry. With meticulous attention to detail and a firm grasp of regulatory requirements, she ensures compliance with clients’ criteria and state and federal regulations.
Jennifer audits collections calls, ensuring they meet client-specific criteria and comply with regulations, providing valuable insights and maintaining industry standards.
Beyond her auditing responsibilities, Jennifer takes the lead in organizing and facilitating monthly call calibrations. These sessions serve as a collaborative forum where clients and their vendors come together to discuss call monitoring results and address any findings or areas for improvement. Jennifer’s guidance fosters open communication and ensures alignment between clients and vendors, driving continuous improvement in collections practices.
Jennifer stays up-to-date with compliance and industry best practices by participating regularly in peer meetings, regulatory updates and industry webinars. This keeps her informed about emerging issues and ensures she remains a knowledgeable leader in collections compliance.
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