Reimagining and Improving Student Education

DEPARTMENT OF EDUCATION

34 CFR Parts 674, 682, and 685

[Docket ID ED-2025-OPE-0944]

RIN 1840-AD98

Reimagining and Improving Student Education

AGENCY:

Office of Postsecondary Education, Department of Education.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Secretary proposes to amend the regulations for the Federal student loan programs authorized under title IV of the Higher Education Act (HEA) of 1965, as amended (the title IV, HEA programs) to implement the statutory changes to the title IV, HEA programs included in the One Big Beautiful Bill Act (OBBB) signed into law by President Trump on July 4, 2025. These changes include establishing new loan limits for graduate students, professional students, and parents, and phasing out the Graduate PLUS Program. The Department notes that the term “professional student” as used in this Notice of Proposed Rulemaking (NPRM) is intended solely to distinguish those programs that we propose would be eligible for higher loan limits, as required by the OBBB. The designation, or lack thereof, of a program as “professional” does not reflect a value judgment by the Department regarding whether a borrower graduating from the program is considered a “professional.” This NPRM only interprets the phrase “professional student” as used in the context of the loan limits established by the OBBB. The OBBB also simplifies the current broken and confusing myriad of Federal student loan repayment plans by phasing out the existing Income-Contingent Repayment (ICR) plans, creating a new tiered standard repayment plan option, and implementing a new income-driven repayment plan known as the Repayment Assistant Plan. The OBBB also enables borrowers in default who have previously rehabilitated a defaulted loan a second chance to rehabilitate their loan(s) and resume repayment.

DATES:

We must receive your comments on or before March 2, 2026.

ADDRESSES:

Submit your comments through the Federal eRulemaking Portal at

www.regulations.gov.

The Department of Education (Department) will not accept comments submitted by fax or by email or comments submitted after the comment period closes. To make sure that the Department does not receive duplicate copies, please submit your comment only once. Additionally, please include the Docket ID at the top of your comments.

Information on using

Regulations.gov,

including instructions for submitting comments, is available on the site under “FAQ.” If you require an accommodation or cannot otherwise submit your comments via

Regulations.gov

, please contact

regulationshelpdesk@gsa.gov

or by phone at 1-866-498-2945. If you are deaf, hard of hearing, or have a speech disability and wish to access telecommunications relay services, please dial 7-1-1.

Privacy Note:

The Department's policy is to make all comments received from members of the public available for public viewing in their entirety on the Federal eRulemaking at

www.regulations.gov.

Therefore, commenters should include in their comments only information that they wish to make publicly available. Additionally, commenters should not include in their comments any personally identifiable information (PII) in comments about other individuals. For example, if your comment describes an experience of someone other than yourself, please do not identify that individual or include any personal information that identifies that individual. The Department reserves the right to redact a portion of a comment or the entire comment at any time if any PII about other individuals is included.

FOR FURTHER INFORMATION CONTACT:

Tamy Abernathy, Office of Postsecondary Education, 400 Maryland Ave. SW, 5th Floor, Washington, DC 20202. Telephone: (202) 245-4595. Email:

NegRegNPRMHelp@ed.gov.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

The Secretary proposes to implement the amendments made to the HEA relating to the Federal student loan programs made by the OBBB through these regulations.

These proposed regulations would revise the Direct Loan Program under 34 CFR part 685 by amending annual and aggregate loan limits for graduate, professional, and parent loan borrowers. The proposed regulations would also implement two new streamlined student loan repayment plans for new borrowers, the “Repayment Assistance Plan” and the “Tiered Standard” repayment plan. The proposed regulations also make conforming amendments to current regulations on consolidation, deferment, forbearance, and Public Service Loan Forgiveness (PSLF). The proposed regulations also provide borrowers in default a second opportunity to rehabilitate their loans and resume repayment, even if they previously rehabilitated a defaulted loan.

A brief summary of these proposed regulations is available at

https://www.regulations.gov/document/ED-2025-OPE-0944.

II. Summary of the Major Provisions of This Regulatory Action

These proposed regulations would:

• Amend §§ 674.39, 682.215, and 682.405 to allow loan rehabilitation twice per each loan borrowed under the Federal Perkins Program, Federal Family Education Loan Program, and the Direct Loan Program.

• Amend § 685.102 to include new definitions for the following terms:

expected time to credential, graduate student,

professional student,

and

program length.

• Amend § 685.200 to include Direct PLUS Loan eligibility for graduate and professional students.

• Amend § 685.201 to establish the limited Direct PLUS Loan eligibility for a graduate or professional student.

• Amend § 685.203 to include new Direct Loan annual and aggregate limits, create a new lifetime maximum aggregate limit, establish less than full-time reduction of annual loan limits, and permit institutions to limit borrowing for specific programs.

• Amend § 685.204 to clarify conditions and borrower eligibility for the unemployment deferment and the economic hardship deferment.

• Amend § 685.205 to establish the modified eligibility criteria for borrowers to receive a forbearance.

• Amend § 685.208 to establish the terms for the Tiered Standard repayment plan, set the minimum payment for the Tiered Standard repayment plan, and restructure each Fixed repayment plan's terms under their respective plan.

• Amend § 685.209 to establish terms for the Repayment Assistance Plan and sunset ICR plans and conditions.

• Amend § 685.210 to provide information to borrowers about choosing a repayment plan.

• Amend § 685.211 to establish miscellaneous repayment provisions including the minimum payment increase for the Income-Based Repayment (IBR) plan.

• Amend § 685.219 to clarify that repaying under the Repayment Assistance Plan will qualify for PSLF if all other eligibility criteria are met.

• Amend § 685.220 to provide terms and repayment plan eligibility for consolidation loans.

• Amend § 685.221 to clarify when a borrower may be eligible for an alternative repayment plan.

• Amend § 685.303 to waive the substantially equal disbursement requirement for an institution when a borrower has less than full-time enrollment for the academic year and is subject to the schedule of reductions.

While the Department is proposing the regulations in a consolidated NPRM, it considers each to be a discrete change independent of other proposed changes. Consistent with 34 CFR 685.109, “[i]f any provision of this subpart or its application to any person, act, or practice is held invalid, the remainder of the subpart or the application of its provisions to any person, act, or practice will not be affected thereby.”

Cost and Benefits:

As further detailed in the Regulatory Impact Analysis (RIA), the proposed regulations would have significant impacts on students, borrowers, educational institutions, and taxpayers.

Under the proposed revisions, borrowers would benefit from new loan repayment terms, such as monthly interest cancellation and principal payment subsidies under the Repayment Assistance Plan. New caps on Federal loans for graduate and professional education, as well as caps on Parent PLUS Loans, will rein in increases in graduate student and parent borrowing and put downward pressure on tuition prices at institutions. These new loan limits will encourage institutions to evaluate the true cost of their programs and create efficiencies where necessary to allow students to enroll and fund their education within the boundaries of the new, responsible, loan limits determined by Congress and/or the institution. Changes to student loans enacted in the OBBB will result in significant savings to the taxpayer by reducing the excessive subsidy costs of loan forgiveness and other high-cost terms and conditions. Specifically, the new annual and lifetime caps on borrowing will reduce taxpayer exposure for loans that could potentially be forgiven under the Department's Public Service Loan Forgiveness Program, Closed School Loan Discharges, Borrower Defense to Repayment discharges, death of the borrower discharges, total and permanent disability discharges, time-based forgiveness discharges under income-based repayment, and discharges that may occur in bankruptcy. The Department estimates that from 2021 to 2025, it forgave $199 billion in student debt as a result of these provisions.

These proposed regulations would reduce outlays received from Direct Loans for institutions of higher education and certain groups of students. There are four main cost areas. First, the OBBB requires institutions to reduce annual loan limits in direct proportion to the percentage of full-time status that the student is enrolled. Prior to the OBBB, part-time students who were enrolled at least half-time could receive the same annual loan amount as students attending full-time. That provision will save taxpayers money by reducing the amounts borrowed by part-time students. Students will also receive less funds as credit balances as a result of the reduced borrowing. Institutions will, as a result, receive less revenue from loans made by the Department on behalf of students. Second, the OBBB limits excessive borrowing by graduate and professional students due to the elimination of unlimited borrowing under the Graduate PLUS Program, maintaining current borrowing limits of $20,500 for graduate students (but limiting borrowing to $100,000 in aggregate), and targeting higher loan limits of $50,000 annually ($200,000 in aggregate) to students enrolled in professional degree programs. Third, the OBBB streamlines the existing myriad of forbearance and deferment options while also limiting the time that borrowers can spend in certain forbearances. These changes should result in more time in active repayment by borrowers, as well as streamlining deferment and forbearance options to the benefit of borrowers, Federal student loan servicers, and taxpayers. Fourth, parents of undergraduate students will also no longer have unlimited borrowing under the Parent PLUS Loan program, which will now be capped at $20,000 per student each year ($65,000 aggregate limit per student). Now parent borrowers, in addition to student borrowers, will have common sense limits on the amount they can borrow to finance their children's postsecondary education.

III. Invitation to Comment

We invite you to submit comments regarding these proposed regulations. Please clearly identify the specific section or sections of the proposed regulations that each of your comments address and arrange your comments in the same order as the proposed regulations. The Department will not accept comments submitted after the comment period closes.

The following tips are meant to help you prepare your comments:

• Please be concise but include objective sources of support for your claims.

• Explain your views as clearly as possible and refrain from using any profanity.

• Refer to specific sections and subsections of the proposed regulations throughout your comments, particularly in any headings that are used to organize your submission.

• Explain why you agree or disagree with the proposed regulatory text and support these reasons with data-driven evidence, including the depth and breadth of your personal or professional experiences. We encourage commenters to include supporting facts, research, and evidence in their comments. When doing so, commenters are encouraged to provide citations to the published materials referenced, including active hyperlinks. Likewise, commenters who reference materials which have not been published are encouraged to upload relevant data collection instruments, data sets, and detailed findings as a part of their comment. Providing such citations and documentation will assist us in analyzing the comments.

• Where you disagree with the proposed regulatory text, suggest alternatives, including regulatory language, and your rationale for the alternative suggestion.

• Do not include PII such as Social Security numbers or loan account numbers for yourself or for others in your submission.

Mass Writing Campaigns:

In instances where individual submissions appear to be duplicates or near duplicates of comments prepared as part of a writing campaign, the Department will post one representative sample comment along with the total comment count for that campaign to

Regulations.gov.

The Department will consider these comments along with all other comments received.

In instances where individual submissions are bundled together (submitted as a single document or packaged together), the Department will post all the substantive comments included in the submissions along with the total comment count for that document or package to

Regulations.gov.

A well-supported comment is often more informative to the agency than multiple form letters.

Public Comments:

The Department invites you to submit comments on all aspects of the proposed regulatory language specified in this Notice of Proposed Rulemaking (NPRM), and in the Regulatory Impact Analysis and Paperwork Reduction Act sections.

The Department may, at its discretion, decide not to post or to withdraw certain comments and other materials that contain promotion of commercial services or products, or are spam.

We may not address comments outside of the scope of these proposed regulations in the final regulations. Comments that are outside of the scope of these proposed regulations are comments that do not discuss the content or impact of the proposed regulations or the Department's evidence or reasons for the proposed regulations.

Comments that are submitted after the comment period closes will not be posted to

Regulations.gov

or addressed in the final regulations.

We invite you to assist us in complying with the requirements of (E.O.)s 12866 and 13563 and their overall requirement of reducing regulatory burden that might result from these proposed regulations. Please let us know of ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the Department's programs and activities.

During and after the comment period, you may inspect public comments about these proposed regulations by accessing

Regulations.gov.

Assistance to Individuals with Disabilities in Reviewing the Rulemaking Record:

On request, we will provide an appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for these proposed regulations. If you want to schedule an appointment for this type of accommodation or auxiliary aid, please contact the Information Technology Accessibility Program Help Desk at

ITAPSupport@ed.gov

to help facilitate.

Clarity of the Regulations

Executive Order (E.O.) 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand. The Secretary invites comments on how to make the regulation easier to understand, including answers to questions such as the following:

• Are the requirements in the proposed regulations clearly stated?

• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?

• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphs) aid or reduce its clarity?

• Would the proposed regulations be easier to understand if we divided them into additional (but shorter) sections? (A “section” is preceded by the symbol “§ ” and a numbered heading; for example, § 668.2 General definitions.)

• Could the description of the proposed regulations in the

SUPPLEMENTARY INFORMATION

section of this preamble be more helpful in making the proposed regulations easier to understand? If so, how?

• What else could we do to make the proposed regulations easier to understand?

• To send any comments that concern how the Department could make these proposed regulations easier to understand, see the instructions in the

ADDRESSES

section.

IV. Background

The OBBB, which President Trump signed into law on July 4, 2025, makes extensive statutory changes to fix broken and unnecessarily complex aspects of the Federal student loan programs in the areas of loan limits, repayment plans, and related provisions in title IV. Among other changes, the OBBB sets a new lifetime borrowing cap (approximately $257,500 for most borrowers), eliminates new Graduate PLUS Loans, eliminates unlimited borrowing under the PLUS program for parents, maintains current annual limits under the Direct Loan Program for undergraduate and graduate students, increases annual loan limits for professional degree students, establishes aggregate limits for graduate students, professional degree students, and parents of undergraduates, and reduces annual loan amounts for students enrolled less than full-time. For repayment, the OBBB simplifies and streamlines the current confusing patchwork of repayment plan options for future borrowers to two flexible options: a new Tiered Standard plan for fixed monthly payments over a 10 to 25-year term, and a new income-driven plan called the Repayment Assistance Plan that does not put borrowers deeper in debt by preventing negative amortization over the life of the loan. Confusing, outdated (and in some cases unlawful) repayment plans are phased out, including several existing income-contingent plans, ICR, PAYE, and SAVE (which has been held unlawful in federal court.

See Missouri

v.

Biden,

112 F.4th 531, 538 (8th Cir. 2024)).

This notice of proposed rulemaking complies with Section 492 of the HEA, which requires the Secretary to obtain public input and conduct negotiated rulemaking before issuing proposed regulations for the title IV, HEA programs. To meet those requirements and implement the new statutory directives provided for in the OBBB, the Department convened the Reimagining and Improving Student Education (RISE) negotiated rulemaking Committee. The Committee was composed of representatives of institutions, students and borrowers, State officials, financial aid administrators, loan servicers, and consumer and civil rights organizations. The Committee met over multiple sessions in the fall of 2025 and reached consensus on the entirety of the regulatory text described in this NPRM. In accordance with the protocols established by the Committee, the Department has incorporated the regulatory amendatory text that was mutually agreed upon into this NPRM. Building on the statutory and regulatory history, and the RISE Committee's consensus language, this NPRM conforms Direct Loan rules to the changes enacted in the OBBB by revising loan limit provisions, restructuring repayment options (including IBR and adding the new Repayment Assistance Plan), updating PSLF eligibility and qualifying payment rules, and aligning consolidation, deferment, forbearance, and borrower relief provisions with the new framework.

V. Authority for This Regulatory Action

When Congress passes legislation amending statutory provisions regarding programs administered by an agency, that agency is tasked with implementing those changes in its regulations. The OBBB amended portions of the HEA related to the Federal student loan programs administered by the Department. The Secretary has been granted the broad authority by Congress to implement federal student aid programs under title IV of the HEA, including amendments made by the OBBB. See 20 U.S.C. 1221e-3,

see

also 20 U.S.C. 1082, 3441, 3474, 3471. In order to carry out functions otherwise vested in the Secretary by law or by delegation of authority pursuant to law, and subject to limitations as may be otherwise imposed by law, the Secretary is authorized to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of operations of, and governing the applicable programs administered by, the Department.

See

20 U.S.C. 1221e-3. These programs include the Federal student loan programs authorized by the HEA.

Waiver of HEA Master Calendar Requirements

Congress may waive, modify, or rescind requirements in the HEA that require the Department to follow certain processes and procedures when engaging in informal notice-and-comment rulemaking. Specifically, when Congress imposes a statutory deadline that is irreconcilable with other procedural requirements, like in the APA or HEA, then those other procedures have been implicitly waived by Congress.

See, e.g., Asiana Airlines

v.

F.A.A.,

134 F.3d 393, 398 (D.C. Cir. 1998);

Methodist Hospital of Sacramento

v.

Shalala,

38 F.3d 1225, 1237 (D.C. Cir. 1998) (finding that certain parts of the APA procedural framework had been waived when Congress gave an agency direction that conflicts with and is irreconcilable with the APA). Indeed, the Harmonious-Reading Canon provides that statutes should be interpretated in a way that renders them compatible, not contradictory.

See

Scalia & Garner,

Reading Law,

180 (2012). As such, the Department does not read statutes to create instructions that directly conflict. Where Congress has given an agency specific direction in a statute that could not be followed if the agency also followed another part of the APA (or HEA, as is relevant here), then the provision is waived.

Here, the OBBB was enacted on July 4, 2025. The OBBB directs the Department to implement roughly a dozen provisions by July 1, 2026. Many of these provisions are not self-executing and could not be implemented absent the Department promulgating regulations to provide details for institutions on how to comply with the OBBB. Congress gave the Secretary discretion within the OBBB to implement the provisions impacting the Federal student loan programs and knew that its commands were not self-executing when directing the Secretary to take action. Congress expected the Secretary to act via rulemaking before July 1, 2026, to enable these provisions to actually go into effect.

The master calendar in the HEA provides that regulatory changes initiated by the Secretary affecting the programs under title IV of the HEA must be published in final form by November 1st in order for them to go into effect by July 1st of the following year. 20 U.S.C. 1089(c)(1). Section 492 of the HEA requires the Department to undertake negotiated rulemaking as part of any regulation under title IV of the HEA. In order to conduct negotiated rulemaking, the Department must have a public hearing (providing notice to the public), solicit nominations from the public to serve on a negotiated rulemaking Committee, select non-Federal negotiators, hold negotiations, develop an NPRM and submit it for review by the Office of Information and Regulatory Affairs (OIRA), publish an NPRM (with at least a 30 day comment period), and then publish a final rule that responds to any substantive comments received. As detailed below, the fastest possible timeframe in which the negotiated rulemaking process for the RISE rulemaking packages could have occurred is 149 days, which is irreconcilable with the timeline allowed by the enactment of the OBBB, due to the fact that there were 120 days between July 4, 2025, (the day the OBBB was enacted), and November 1, 2025, (the publication date of the final rule required by the master calendar).

It would not have been possible for the Department to undertake every step of the negotiated rulemaking process by November 1, 2025, in order to implement the provisions that become effective in the OBBB by July 1, 2026, which is the statutory effective date. Congress was aware of this temporal impossibility when they passed the OBBB, yet Congress decided that these provisions would still go into effect on July 1, 2026. Because these provisions are not self-implementing and cannot go into effect unless the Department promulgates a final rule, the OBBB implicitly waives the master calendar.

For example, Congress directed the Department to publish a schedule of reductions for part-time students to reduce their annual loan eligibility. (Sec. 81001 of the OBBB, P.L. 119-21). The Department announced in DCL: GEN-25-04, published on July 18, 2025, that the schedule of reductions will be issued by the Secretary and used to determine the reduction in the annual loan limits for students who are enrolled less than full-time for subsequent academic years (2026-2027 and beyond). The Department will publish the schedule of reductions in the final rule. This provision was effective upon enactment; however, the 2025-2026 award year had already begun prior to President Trump signing the bill and Federal student loans for that year had already been calculated and initially disbursed. In addition, Congress left open to regulation important details in the Repayment Assistance Program relating to how the Department should treat married borrowers' income, and whether the Department should essentially double count their income when calculating repayment rates. Moreover, in codifying a regulatory definition for professional student that is open-ended, Congress did not fully address what types of programs should be considered professional programs or graduate programs. Indeed, the statute's operative definition of professional degree broadly describes what a professional student is and includes an illustrative list of degrees that meet that operative definition. 34 CFR 668.2 (Noting that the professional degrees “include but are not limited to” the degrees listed). The definition of graduate degree is interrelated to the definition of professional degree, in that a degree is a graduate degree if it awards a graduate credential but is not a professional degree.

With these important details unanswered by the plain text of the OBBB, it is clear that the policy scheme set forth in the HEA made by the OBBB cannot be implemented absent regulatory action by the Department.

At the same time, even though the requirements of negotiated rulemaking are onerous, it is possible to undergo negotiated rulemaking and publish a final rule at least 30 days prior to the effective date of these OBBB provisions on July 1, 2026. Therefore, the OBBB does not waive negotiated rulemaking nor any provision in the APA. For provisions in the OBBB that become effective July 1, 2027, and beyond, Congress did not implicitly repeal the master calendar because it is possible for the Department to publish a final rule that complies with the master calendar to implement those provisions. Nonetheless, the Department is conducting rulemaking relating to those provisions that go into effect in 2027 and beyond due to the interconnected nature of these provisions as they relate to Federal student aid programs.

VI. Public Participation

Section 492 of the HEA, 20 U.S.C. 1098a, requires the Secretary to obtain public involvement in the development of proposed regulations affecting the title IV, HEA programs. Prior to developing this NPRM, the Department obtained advice and recommendations from individuals and representatives of groups involved in the title IV, HEA programs. This outreach included a 30-day public comment period, one day of public hearings, and culminated in nine days of in-person negotiated rulemaking at the Department's headquarters in Washington, DC. Further details regarding these efforts are provided below.

On July 25, 2025, the Department published in the

Federal Register

(90

FR 35261) a notice of our intent to hold a public hearing and to establish two negotiated rulemaking Committees to consider regulatory changes to the title IV, HEA programs included in the OBBB with one Committee focusing on topics regarding annual and aggregate loan limits, loan deferment, forbearance, and repayment, among others, related to Federal student loans.

Public Comments and Hearings

We received 1,864 written comments in response to the

Federal Register

notice. Additionally, we held a virtual public hearing on August 7, 2025. A total of 57 individuals testified virtually at the hearing.

You may view the written comments submitted in response to the July 29, 2025 “Intent to Establish Negotiated Rulemaking Committees; Correction” correction notice (90 FR 35652), by visiting the Federal eRulemaking Portal at

Regulations.gov

, within docket ID ED-2025-OPE-0151. Instructions for finding comments are also available on the site under “FAQ.”

Transcripts of the public hearings can be accessed at

https://www.ed.gov/laws-and-policy/higher-education-laws-and-policy/higher-education-policy/negotiated-rulemaking-for-higher-education-2025-2026.

Negotiated Rulemaking

On July 25, 2025, we published a notice in the

Federal Register

announcing our intent to establish one Committee to prepare these proposed regulations (90 FR 35261). The notice set forth a schedule for Committee meetings and requested nominations for individual, non-Federal negotiators to serve on the negotiated rulemaking Committee. In the notice, we also announced the topics that the Committee would address.

We chose members of the negotiated rulemaking Committee from individuals nominated by groups involved in the title IV, HEA programs. We selected individuals with demonstrated expertise or experience with the student loan program. The negotiated rulemaking Committee included the following members, representing their respective constituencies:

• Legal assistance organizations that represent students and borrowers, consumer advocates, and civil rights groups that represent students: Ashley Naporlee, Lead Attorney, Consumer Protection Team, Legal Aid Society of San Diego, and Tamar Hoffman (alternate), Staff Attorney, Homeownership and Consumer Rights Unit, Community Legal Services of Philadelphia.

• Student loan servicers, collection agencies, lenders, and guaranty agencies: Alexander Ricci, President, National Council of Higher Education Resources, and Lori Hartung (alternate), Regional Sales Executive, Education Computer Systems, Inc.

• Organizations representing taxpayers and the public interest: Alexander Holt, Senior Advisor on Higher Education, Committee for a Responsible Federal Budget, and Dr. Andrew Gillen (alternate), Research Fellow, Cato Institute.

• Private nonprofit institutions of higher education including institutions eligible to receive Federal assistance under Title III and Title V of the HEA tribal colleges and universities, and historically black colleges and universities: Jenna Colvin, President, Georgia Independent College Association, and Patti Kohler (alternate), Vice President of Financial Aid, Western Governors University.

• Proprietary institutions of higher education, as defined in 34 CFR 600.5: Dr. Andy Vaughn, President and Chief Executive Officer, Alliant International University, and Jeffrey Bodimer (alternate), Vice President of Regulatory Compliance and Financial Aid, Post University.

• Public institutions of higher education including institutions eligible to receive Federal assistance under Title III and Title V of the HEA, tribal colleges and universities, and historically black colleges and universities: Dr. Timothy B. King, Vice Provost for Student Success, Jacksonville State University, and Matthew Ellsworth (alternate), Director of Financial Aid, Western Carolina University.

• State officials, including State student grant agencies, State higher education executive officers, and representatives of authorizing agencies: Scott Kemp, Student Loan Advocate, State Council of Higher Education for Virginia, and Dr. Bennett Boggs (alternate), Commissioner, Missouri Department of Higher Education & Workforce Development.

• Student loan borrowers, including borrowers in school, deferment, forbearance, delinquent, default, and currently in repayment: Deborah Lilly, Senior Project Manager, UnitedHealthcare, and Emeka Oguh (alternate), Chief Executive Officer, PeopleJoy.

• Student loan borrowers who are veterans, U.S. military service members, or groups representing them: Faisal Sulman, Legal Fellow, Student Veterans of America, and Robert H. Carey, Jr. (alternate), Executive Director, National Defense Committee.

The Committee discussion was led by Tamy Abernathy, Director of the Policy Coordination Group of the Department and supported by the Department's Office of General Counsel and Office of Postsecondary Education, with Annmarie Weisman of Federal Student Aid serving as facilitator for the Committee.

The negotiated rulemaking Committee for these proposed regulations met from September 29 to October 3, 2025, and November 3 to November 6, 2025, which concluded the negotiations on November 7, 2025, a day earlier than originally scheduled. The Committee reviewed and discussed draft regulations prepared by the Department, as well as alternative regulatory language and suggestions proposed by Committee members. Additionally, during each negotiated rulemaking meeting, some non-Federal negotiators shared feedback that they had received from stakeholders in their respective constituencies. This approach facilitated the inclusion of a wide array of ideas and perspectives, which contributed to the development of the consensus language.

Under the organizational protocols for negotiated rulemaking agreed to by all members of the Committee, if the Committee reaches consensus on the proposed regulations, the Department agrees to publish, without substantive alteration, a defined group of regulations on which the Committee reached consensus—unless the Secretary reopens the process or provides a written explanation to the participants stating why she has decided to depart from the agreement reached during negotiations. In this instance, consensus is considered to be the absence of dissent by any member of the negotiated rulemaking Committee (abstaining members are not considered to be dissenting from the proposal). The Committee reached consensus on the entirety of the draft regulations on November 6, 2025. As a result, this NPRM reflects the consensus language without any substantive changes.

Further information on the negotiated rulemaking process can be found at:

https://www.ed.gov/laws-and-policy/higher-education-laws-and-policy/higher-education-policy/negotiated-rulemaking-for-higher-education-2025-2026.

VI. Significant Proposed Regulations

We discuss substantive issues under the sections of the proposed regulations to which they pertain. While we generally do not address technical,

minor, or legal changes to the proposed amendatory text, there are a few areas where we determined technical corrections were necessary and we fully explain those later in the sections where the corrections have been made in this NPRM.

Federal Perkins Loan Program

Loan Rehabilitation (§ 674.39)

Statute:

Section 82003(a)(2) of the OBBB amends

Section 464(h)(1)(D) of the HEA to provide that loan rehabilitation for defaulted Federal Perkins loans is limited to a maximum of two times per loan. Section 82003(a)(3) of the OBBB provides that the effective date of this statutory change is July 1, 2027.

Current Regulations:

Section 674.39 contains the general terms and conditions pertaining to loan rehabilitation in the Federal Perkins Loan Program. Specifically, § 674.39(e) provides that a borrower may rehabilitate a defaulted Federal Perkins Loan only one time.

Proposed Regulations:

The Department proposes to amend the regulations in § 674.39(e) to provide that on or after July 1, 2027, a borrower may rehabilitate a defaulted loan a maximum of two times. This means that a borrower who has previously rehabilitated a defaulted loan but who has subsequently defaulted may begin the process of rehabilitating a loan on or after July 1, 2027, to bring their loan back into good standing and resume repayment.

Reasons:

The proposed regulations reflect the changes made by Section 82003(a)(2) of the OBBB, which amended Section 464(h)(1)(D) of the HEA to update the loan rehabilitation limits for the Federal Perkins Loan Program. Additionally, Section 82003(a)(3) of the OBBB provides that the effective date of this statutory change takes effect beginning on July 1, 2027. Because borrowers with outstanding Federal Perkins Loans would now have the ability to rehabilitate a defaulted loan a maximum of two times beginning July 1, 2027, we believe that the regulations should reflect the number of times a borrower may rehabilitate this type of loan before and after July 1, 2027.

Accordingly, the Department proposes to bifurcate the limitations on loan rehabilitations for the Federal Perkins Loan Program: proposed § 674.39(e)(1) would retain the limitation in the current regulations that would be in effect prior to July 1, 2027, whereby a borrower can only obtain the benefit of loan rehabilitation once for a defaulted Federal Perkins Loan. Proposed § 674.39(e)(2) would provide that on or after July 1, 2027, a borrower may rehabilitate a defaulted Federal Perkins Loan a maximum of two times. This bifurcation would make clear the number of times a borrower may rehabilitate based on the date of rehabilitation.

During the negotiated rulemaking sessions, non-Federal negotiators focused on how the Department should treat traditional loan rehabilitations completed during the COVID-19 payment pause, particularly for purposes of the statutory limit on the number of rehabilitations available to a borrower. Negotiators emphasized that some borrowers completed “real” rehabilitations during the pause—often in circumstances where Fresh Start later became available—and urged the Department to make certain that those COVID-period rehabilitations would not count against the borrower's total number of rehabilitation attempts, given the unusual operational environment and the availability of alternative default-resolution pathways during the pandemic. We explained that, while Fresh Start

1

is a distinct initiative and does not constitute rehabilitation, a borrower who completed a rehabilitation during the payment pause, is considered to have completed the rehabilitation process once. During this time, borrowers were only permitted to rehabilitate their loans one time under the statute. Therefore, because those borrowers completed rehabilitation in accordance with statutory requirements, the Department does not have the authority to disregard the rehabilitation when applying the statutory maximum. However, under the OBBB, effective July 1, 2027, the statute has increased the limit of rehabilitations to twice.

1

Federal Student Aid, U.S. Dept of Educ.,

A Fresh Start for Borrowers with Federal Student Loans in Default

(Fact Sheet) (last updated July 11, 2024),

https://fsapartners.ed.gov/sites/default/files/2022-08/FreshStartFactSheet.pdf

Federal Family Education Loan (FFEL) Program

Loan Rehabilitation Agreement (§ 682.405)

Statute:

Section 82003(a)(1) of the OBBB amends section 428F(a)(5) of the HEA to change the loan rehabilitation limit in that section to reflect that a defaulted loan may be rehabilitated twice. Prior to the OBBB, such loans could only be rehabilitated once. Section 82003(a)(3) of the OBBB provides that the effective date of this statutory change is July 1, 2027.

Current Regulations:

Section 682.405 contains the general terms and conditions of rehabilitation of defaulted loans made through the Federal Family Education Loan (FFEL) program, which are administered by a guaranty agency. Section 682.405(a)(3) provides that if a borrower's FFEL program loan is being collected through administrative wage garnishment (AWG) while the borrower is also rehabilitating that loan under a rehabilitation agreement, the guaranty agency must continue AWG until the borrower makes five qualifying monthly payments under such rehabilitation agreement. After receiving the fifth monthly payment, the guaranty agency suspends the AWG order. Such a borrower may only obtain the benefit of a suspension of AWG while also attempting to rehabilitate a defaulted FFEL program loan once. Section 682.405(a)(4) provides that after the FFEL program loan has been rehabilitated, the borrower regains eligibility and the benefits afforded to non-defaulted borrowers, including access to certain deferments, from the date of the rehabilitation. Section 682.405(a)(4) further provides that for any loan that is rehabilitated on or after August 14, 2008, the borrower cannot rehabilitate the loan again if the loan returns to default status following the rehabilitation.

Proposed Regulations:

The Department proposes to amend the regulations at § 682.405(a)(3)(iii)(B) to provide that on or after July 1, 2027, a borrower may only obtain the suspension of AWG benefit one time per each attempt to rehabilitate a defaulted loan. Furthermore, the Department also proposes that a loan may only be rehabilitated once between August 14, 2008, through June 30, 2027. On or after July 1, 2027, a loan may be rehabilitated a maximum of two times over the loan's lifetime, regardless of when the loan was made.

Reasons:

The regulations are amended to reflect the changes made by the OBBB. The Department also amends proposed § 682.405(a)(3)(iii) to correct an administrative error that includes adding paragraph (A) and (B). This proposed additional language is needed to distinguish the number of times a FFEL borrower may rehabilitate their defaulted loans before and after June 30, 2027, and its impact on the suspension of AWG. Accordingly, we revised current § 682.405(a)(3)(iii) to proposed § 682.405(a)(3)(iii)(A), which would only apply for loans on or before June 30, 2027, and state that a borrower may only obtain the benefit of a suspension of AWG while also attempting to rehabilitate a defaulted loan once.

Proposed § 682.405(a)(3)(iii)(B) would apply to loans obtained on or after July 1, 2027, and states that a borrower may only obtain the suspension of AWG benefit one time per each attempt to rehabilitate a defaulted loan. We believe separating these provisions at the subparagraph level would make clear that suspension of AWG remains available for one eligible rehabilitation through June 30, 2027, and provides that the suspension would be available for up to a maximum two rehabilitations per loan on or after July 1, 2027.

Income-Based Repayment Plan (§ 682.215)

Statute:

Section 82001(f)(1)(B) of the OBBB amends Section 493C(a)(3) of the HEA to eliminate the requirement that FFEL borrowers must have a partial financial hardship to be eligible for IBR. Section 82001(g) of the OBBB amends Section 428(b)(9)(A)(v) of the HEA to remove the partial financial hardship requirement from IBR for FFEL Loans. The OBBB also creates the definition of

applicable amount

in Section 493C(a)(3) of the HEA. These provisions were effective upon enactment, and the Department has already taken steps to eliminate the requirement that borrowers show a partial financial hardship to participate in existing IDR plans.

Current Regulations:

Section 682.215 contains the regulations on the IBR plan for FFEL program loans. Section 682.215(a) provides the definitional terms that are applicable to the IBR plan, including a definition of partial financial hardship. Section 682.215(b) provides the terms and conditions of the IBR plan, including a borrower's eligibility for the IBR plan and the calculation of a borrower's monthly payment under the plan. In current regulations, to enroll in the IBR plan, the borrower must have a partial financial hardship and the borrower's monthly loan payments are limited to no more than 15 percent of the amount by which the borrower's adjusted gross income exceeds 150 percent of the poverty line income applicable to the borrower's family size, divided by 12.

Section 682.215(d) provides for changes in a borrower's payment amount if a borrower no longer has a partial financial hardship or if a borrower elects to repay their loans under a different repayment plan. Section 682.215(e) provides the eligibility documentation, verification, and notification requirements to determine a borrower's initial or continued eligibility for the IBR plan or to calculate a monthly payment under such plan. Finally, Section 682.215(f) provides the loan forgiveness provisions under the IBR plan: in general, a borrower receives forgiveness of the remaining balance of their loans after the borrower has made 300 qualifying monthly payments (or 25 years) under IBR.

Proposed Regulations:

To conform the regulations to changes of the HEA that were enacted by the OBBB, we are proposing to amend the regulations at § 682.215(a)(4) to remove the definition of

partial financial hardship

and include a new definition of

applicable amount. Applicable amount

would mean for the purposes of the IBR plan, 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which the adjusted gross income of the borrower and the borrower's spouse (if applicable) exceeds 150 percent of the poverty guideline. We also propose to amend the terms and conditions of the IBR plan in § 682.215(b), including a borrower's eligibility for the IBR plan and the calculation of a borrower's monthly payment under the IBR plan by removing references to partial financial hardship, and where appropriate, replacing references to partial financial hardship with a provision of the

applicable amount

calculated under IBR. Finally, we propose to amend the forgiveness provisions in IBR plan in § 682.215(f) by removing references to partial financial hardship.

Reasons:

The regulations are amended to reflect the changes made by the OBBB, including the definition of

applicable amount.

The term

applicable amount

by and large supplants partial financial hardship, and we propose making conforming changes throughout § 682.215 by removing partial financial hardship or removing the concepts of partial financial hardship by using

applicable amount

instead. Additionally, the Department removed the definition of

partial financial hardship

in § 682.215(a)(4) and removed the term throughout the section.

William D. Ford Federal Direct Student Loan (Direct Loan) Program

Definitions (§ 685.102)

Statute:

Section 81001(2) of the OBBB amends Section 455(a) of the HEA and defines the following terms:

expected time to credential, graduate student,

professional student,

and

program length.

Current Regulations:

Section 685.102 contains the definitions that apply to 34 CFR part 685. Specifically, § 685.102(a)(1) provides a list of common definitions for all the title IV, HEA programs in 34 CFR part 668 (Student Assistance General Provisions) that also apply to 34 CFR part 685.

Proposed Regulations:

To implement the new provisions enacted in the OBBB, we propose to add several new definitions for the purposes of the Direct Loan Program. We propose to add in § 685.102(b) the following new definitions:

expected time to credential; graduate student;

professional student;

and program length.

We propose to define

expected time to credential

to mean the expected time for a student to complete a program that is the lesser of (1) three academic years or (2) the period determined by calculating the difference between the length of the academic program and the period the student already completed in that academic program.

We propose to define

graduate student

to mean a student who is 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. Above the baccalaureate level means that the program ordinarily requires, as a prerequisite for enrollment, that a student first obtain a baccalaureate degree. For the purposes of dual degree programs that allow individuals to complete a bachelor's degree and either a graduate or professional degree within the same program, a student is considered an undergraduate student for at least the first three years of that program. 34 CFR 668.2(b).

We propose to define

professional student

to mean a student enrolled in a program of study that awards a professional degree upon completion of the program. In defining professional student, we apply the definition of a professional degree in 34 CFR 668.2 that was in effect on July 4, 2025, and clarify that such degrees meet the following elements: signifies both completion of the academic requirements for beginning practice in a given profession and a level of professional skill beyond that which is normally required for a bachelor's degree; is generally at the doctoral level; requires at least six academic years of postsecondary education coursework for completion, including at least two years of post-baccalaureate level coursework; generally requires professional licensure to begin practice; and, includes a four-digit program Classification of Instructional Program (CIP) code, as assigned by the institution or determined by the Secretary, in the same intermediate group in certain fields. We also propose that a professional degree only includes

degrees in the following fields:

2

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.), Theology (M.Div., or M.H.L.), and Clinical Psychology (Psy.D. or Ph.D.). Finally, we propose that a professional student may not receive title IV aid as an undergraduate student for the same period of enrollment and must be enrolled in a program leading to a professional degree. The Department seeks comment on its analysis relating to the professional degrees it included in or excluded from the professional student definition. Specifically, it would be useful to have feedback on how the Department applied the operative definition of

professional student

and utilized the context of the illustrative list of degrees when interpreting the definition.

2

Pharm.D.—Doctor of Pharmacy; D.D.S.—Doctor of Dental Surgery; D.M.D.—Doctor of Dental Medicine; D.V.M.—Doctor of Veterinary Medicine; D.C.—Doctor of Chiropractic; DCM. (or D.C.M)—Doctor of Chiropractic Medicine; L.L.B. (LLB)—Bachelor of Laws (Latin:

Legum Baccalaureus

); J.D. (JD)—Juris Doctor; M.D. (MD)—Doctor of Medicine; O.D. (OD)—Doctor of Optometry; D.O. (DO)—Doctor of Osteopathic Medicine; D.P.M. (DPM)—Doctor of Podiatric Medicine; D.P.—Doctor of Podiatry; Pod.D.—Doctor of Podiatry; M.Div.—Master of Divinity; M.H.L.—commonly rendered as Master of Hebrew Letters or Master's in Hebrew Literature; and Psy.D. or Ph.D. (Ph.D.)— Clinical Psychology Doctor of Psychology or Doctor of Philosophy). Usage reflects common degree-name conventions; terminology and degree-name expansions may vary by institution, accrediting agency, or program.

We propose to define

program length

to mean the minimum amount of time in weeks, months, or years that is specified in the catalog, marketing materials, or other official publications of an institution for a full-time student to complete the requirements for a specific program of study.

Reasons:

In the definition of

expected time to credential

(implementing Section 455(a)(8)(B) of the HEA, added Section 81001 of the OBBB), we begin the definition with “From July 1, 2026.” Section 455(a)(3)(C), (4), (5), and (6) of the HEA, added by Section 81001 of the OBBB, terminates the Department's authority to make Federal Direct PLUS Loans to graduate and professional students, imposes new annual and aggregate limits for Federal Direct Unsubsidized Loans made to graduate and professional students, and imposes new annual and aggregate limits for Federal Direct PLUS Loans. Each of these statutory provisions takes effect on July 1, 2026. Therefore, the definition of

expected time to credential,

begins with “July 1, 2026” because the term is used in regard to the limited exception to Sections 455(a)(3)(C), (4), (5), and (6) of the HEA, added by Section 81001 of the OBBB, for currently enrolled students.

Additionally, in paragraph (1) of the definition of

expected time to credential,

we propose adding a cross reference to the definition of the term

academic year

in 34 CFR 668.3. Because this definition applies to loan limits, we believe using this cross reference to academic year, as defined in § 668.3, would be consistent with existing policy such as that reflected in § 685.203(h), where the loan limit period applies to an academic year as defined in 34 CFR 668.3.

Changes enacted in the OBBB, effective for loans made on or after July 1, 2026, limit borrowing amounts for graduate students to an annual limit of $20,500, with an aggregate lifetime limit of $100,000. For those students enrolled in professional degree programs, the annual limit is $50,000, with an aggregate lifetime limit of $200,000.

Due to the significant difference between the loan limits for graduate students compared to the limits for students enrolled in professional degree programs, institutions, relevant trade associations, and other stakeholders have been seeking to have graduate degree programs that have historically not been identified as first professional or professional degree programs to be classified as such, since the OBBB was signed into law.

3

Labeling such programs as professional degrees would significantly increase the amount of Federal student loans that a borrower may have access to more than doubling the annual loan limit and doubling the lifetime access for graduate students.

3

Blake, Jessica. (2025, November 26).

What to Know About Trump's Definition of Professional Degrees.

Inside Higher ED.

https://www.insidehighered.com/news/government/student-aid-policy/2025/11/26/what-know-about-definition-professional-degree

.

In the definition of

graduate student

(

see

Section 455(a)(4)(C)(i) of the HEA), we include the clause that a graduate student is a “student enrolled in a program of study that is above the baccalaureate level” to make clear that the academic program needs to be above the baccalaureate level to be considered eligible for the higher graduate student loan limits. This proposed change incorporates the current definition of

graduate or professional student

in § 668.2 and a long-standing policy for the Federal Pell Grant, Federal Supplemental Opportunity Grant (FSEOG), and student loan programs that a graduate student is a student who is enrolled in a program or course above the baccalaureate level. Words and phrases typically carry their ordinary and everyday meaning. Scalia & Garner,

Reading Law: The Interpretation of Legal Texts,

69 (2012). The term “graduate” in this context ordinarily means an advanced college degree program that requires, as a condition of enrollment, that a student must have

graduated

from a lower-level postsecondary program (otherwise known as an “undergraduate degree”). The common understanding of the nomenclature “graduate” in this context has always implicitly referred to individuals who have graduated from a baccalaureate degree program, as opposed to graduates of certificate degree or associate's degree programs.

4

Both baccalaureate degrees and associate's degrees are undergraduate degrees, but an associate's degree is not sufficient for a student to enroll in a graduate degree program. Here, we provide that a graduate student must be a student enrolled in a program above the baccalaureate level.

4

See “Graduate”,

“of, relating to, or engaged in studies beyond the first or bachelor's degree,”

Merriam-Webster.com Dictionary,

Merriam-Webster,

https://www.merriam-webster.com/dictionary/graduate.

Accessed 11. Dec. 2025;

see also

“Graduate Student”, “a student who is studying for a degree that is higher than the one received after four years of study at a college or university,”

Cambridge Dictionary.com Dictionary,

Cambridge University Press & Assessment,

https://dictionary.cambridge.org/dictionary/english/graduate-student.

Accessed 11. Dec. 2025. Further, the U.S. Department of State (State) defines `graduate student' as “someone who has earned a bachelor's degree and is pursuing additional education in a specific field”. U.S. Department of State,

Education USA, https://educationusa.stat.gov/your-5-steps-us-study/research-your-options/graduate/what-graduate-student.

Accessed 11. Dec. 2025.

For the purpose of the Direct Loan limits established in section 81001 of the OBBB, Congress made it clear that

“

a graduate student, who is not a professional student,” will continue to receive the current loan limit of $20,500 for unsubsidized loans after July 1, 2026. 20 U.S.C. 1087e(a)(4)(A)(i). The OBBB made no change in the annual loan limit for Direct Unsubsidized Loans for which graduate students can qualify.

To distinguish between graduate students and professional students, Section 81001 of the OBBB amends Section 455(a) of the HEA by defining a

professional student

to mean “a student who is enrolled in a program of study that awards a professional degree (as that term is defined under section 668.2 of title 34, Code of Federal Regulations, and in effect on the date of enactment of July 4, 2025), upon completion of the program.” The OBBB defines

graduate student

as “a student

enrolled in a program of study that awards a graduate credential (other than a professional degree) upon completion of the program.”

The definition of

professional degree

in 34 CFR 668.2 that is referenced in 20 U.S.C. 1087e(a)(4)(C)(ii) and was in effect on the OBBB date of enactment of July 4, 2025, reads as follows:

Professional degree:

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. Professional licensure is also generally required. Examples of a professional degree include but are 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.).

In applying this long-standing definition to the new loan limits for graduate and professional students, the inclusion of the phrase in the definition that “[e]xamples of a professional degree include but are not limited to . . .” suggests that the list of examples provided in the definition need not be exhaustive. Conversely, the list is not completely open-ended, as it provides an illustrative list and a three-part test to draw upon.

Rather than constructing a definition for professional student, Congress borrowed and codified the Department's regulatory definition of the term “professional degree” in 34 CFR 668.2. This definition served a very limited purpose in the Department's regulations, and the Department has not identified any interest in the prior use of the term “professional degree” that will be impaired by its adoption below. However, the Department seeks public feedback on whether any pre-existing interest in the regulation will be affected.

In adopting this definition of “professional degree,” Congress incorporated a variety of words and phrases that may, without context, appear ambiguous or vague on their face or as applied to specific degree programs. The Department must identify the best reading of the statute using the tools of statutory construction.

The operative definition provided in the OBBB establishes a three-part test: First, the degree must signify completion of the academic requirements for beginning practice in a given profession. The word “signify” means to be a sign of something (

https://www.merriam-webster.com/dictionary/signify

). Here, it means when the degree is completed, the recipient has completed all academic requirements to begin practicing in a profession, even if some additional training is required.

Second, the profession the graduate enters must require a level of professional skill beyond what is normally required for a bachelor's degree. This means that the profession must require skill(s) that students who only have a bachelor's degree (or training below a bachelor's degree level) would not normally have. The term “normally” connotes that this rule will be followed in almost every circumstance, but it does not rule out the possibility

per se

of some exception to the rule.

Third, the profession that a degree holder would enter after graduating generally requires professional licensure. This means that before beginning practice, the degree recipient must obtain additional authorization to begin practicing, which would typically flow from a government or standard setting organization. Like the second part, the third part requires licensure “generally,” which connotes that this rule will be followed in almost every circumstance, but it does not rule out the possibility

per se

of some exception to the rule.

In addition to the operative test, the definition also provides for an illustrative list of advanced degrees that are professional degrees and meet the definition. These degrees were codified by Congress into the definition as examples, meaning the Department does not need to do additional interpretive work to know that these specific degree programs qualify as professional degrees. Accordingly, the proposed rule designates each of the degrees on this list as a professional degree for purposes of eligibility for the higher Direct Loan Program limits.

The illustrative list of degrees also provides additional contextual clues that the Department may rely upon when discerning the facial or as applied meaning of the operative test to any specific degree program. For example, while the operative definition does not explicitly state that a degree must

generally

be at the doctoral-level to be considered a

professional degree,

the illustrative list of degrees suggests that this must be the case, as it contains only three non-doctoral degrees L.L.B. (a law degree no longer conferred by American institutions of higher education), as well as the two listed theology degrees (the M.Div. and the M.H.L.).

5

5

This conclusion is further borne out by the fact that the LLB, M.Div., and M.H.L. also fit within exceptions explicitly included within the operative definition. All of the degrees within the illustrative list signifies a level of professional skill beyond that normally required for a bachelor's degree except for the L.L.B. Likewise, professional licensure is required for employment in all of the degree fields included in the illustrative list with the exception of theology.

In the same way, we assume that Congress does not write statutes in a vacuum, but rather “

legislates against the backdrop of existing law

.”

McQuiggin

v.

Perkins,

569 U.S. 383, 398, n. 3 (2013). Here, rather than charting a new course and writing a statute anew, without mooring to previously established statutes, Congress inserted a cross- reference to a long-established Department regulation that defines professional degree. In doing so, under the prior construction canon, we assume that the words and phrases in the definition that the Department has already given authoritative construction to, are to be understood as being adopted by Congress.

See, e.g., Bragdon

v.

Abbott,

524 U.S. 624, 645 (1998) (“When administrative and judicial interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to incorporate its administrative and judicial interpretations as well.”);

Sekhar

v.

United States,

570 U.S. 729, 733, 133 S. Ct. 2720, 2724, 186 L. Ed. 2d 794 (2013) (“[I]f a word is obviously transplanted from another legal source, whether the common law or other legislation, it brings the old soil with it.” (quoting Felix Frankfurter, Some Reflections on the Reading of Statutes, 47 Colum. L.Rev. 527, 537 (1947)).

Against that backdrop, we explore the history of the adoption of the regulation in 34 CFR 668 to provide context as to what Congress implicitly incorporated into the OBBB. When the regulation was promulgated in 2007, the definition of

professional degree

in 34 CFR 668.2 was based on the long-standing definition of a

first-professional degree

used by the Department's National Center for Education Statistics (NCES). The 2007 Integrated Postsecondary Education Data System (IPEDS) Glossary defined

first-professional degrees

as meeting all of the following criteria: (1) completion of the academic requirements to begin practice in the profession; (2) at least 2 years of college work prior to entering the program; and (3) a total of at least 6 academic years of college work to complete the degree program, including

prior required college work plus the length of the professional program itself.

Additionally, at the time, NCES considered the first- professional degree as one which “encompasses certain occupationally specific and closely regulated degree programs including the following: medicine (M.D.), chiropractic (DC or DCM.), dentistry (D.D.S. or D.M.D.), optometry (O.D.), osteopathic medicine (D.O.), pharmacy (Pharm.D.), podiatry (Pod.D. or D.P.M.), veterinary medicine (D.V.M.), law (LL.B. or J.D.), and theology (M.Div., M.H.L., or B.D.)” (

Graduate and First-Professional Students: 2007-08,

Susan Choy,

et al, https://nces.ed.gov/pubs2011/2011174.pdf

).

Prior to that, there had been little change in the criteria for first-professional degrees and in the 10 fields and accompanying degrees that NCES identified as specific examples of such degrees. Such criteria were used for reporting on such programs in IPEDS, and its predecessor survey, the Higher Education General Information Survey (HEGIS).

Against this backdrop, in defining

professional degree

in 34 CFR 668.2, in 2007, the Department proposed in the NPRM to add a definition of

first-professional degree

“based on the definition currently used by the National Center for Education (

sic

) Statistics” (72 FR 44621). In response to a public comment requesting that the Department consider altering several definitions proposed in the NPRM, including

first-professional degree,

so that the terms used reflected the layman's language and terminology used in the Department's

Federal Student Aid Handbook

for student financial aid administrators, the Department agreed with the comment that it was not necessary to specify whether a professional degree is a first-professional degree for the title IV, HEA purposes, and the Department dropped the word “first,” but retained the term “professional degree” and made no changes to the definition proposed in the NPRM. (72 FR 62016). The definition of

professional degree

has not been further amended since November 1, 2007.

In overturning

Chevron

deference in

Loper Bright Enters.

v.

Raimondo,

603 U.S. 369 (2024), the Supreme Court emphasized that

Chevron

had fostered “unwarranted instability in the law, leaving those attempting to plan around agency action in an eternal fog of uncertainty.”

Id.

at 411. The Court explained that

Chevron

had enabled administrative agencies to change course even when Congress had not authorized them to do so.

Id.

However, the Court did not abandon all reliance on agency interpretations of statute, explaining that interpretations issued by agencies “which have remained consistent over time, may be especially useful in determining the statute's meaning.”

Id.

at 370 (citing

American Trucking Assns.,

310 U.S. at 549).

Here, Congress adopted and codified an agency regulation that had been remarkably consistent over time, as it remained unaltered for nearly 20 years, and changes to it before then had been minimal. With that said, the regulation existed in a different context and served a different role in that it had no bearing on Federal student loan eligibility. In that sense, the rule existed in a paradigm where there were no significant legal consequences for a degree being counted, or not, as a professional degree. In addition to its longstanding nature, the comparative lack of legal consequences when the regulation was promulgated serves as some indicia of evidence that the interpretation represents a balanced and fair reading of what a professional degree is. The agency was, in promulgating the rule, free from outside pressure from students and institutions that have a financial incentive to insist upon a broader interpretation that includes more degree programs. While certainly not dispositive, these facts along with the Department's longstanding interpretation, provide “useful evidence in determining the statute's meaning.”

Loper Bright,

603 U.S. at 370.

At the same time, by its own terms, the list of degrees in the definition need not be exhaustive and merely includes an illustrative list of degrees. The Department does not necessarily claim that the included list of professional degrees represents all professional degrees being offered by institutions, just those that the Department has identified as meeting the statutory definition. Indeed, the definition states that “Examples of a professional degree include but are not limited to” the degrees listed. This provides clear clues that the Department may, so long as the operative definition and context allow, add additional degrees to the list of professional degrees through regulation.

At the same time, context is key. And we are bound to adhere closely to the text of the statute. The

interpretive

canon

noscitur a sociis

is instructive in this context. It provides that words and phrases are “known by its associates,” or, when a word or phrase is “susceptible of multiple and wide-ranging meanings,” it is “given more precise content by the neighboring words with which it is associated.”

United States

v.

Williams,

553 U.S. 285, 294 (2008). Here, the illustrative list of degrees Congress provided do just that; they provide context for the types of degrees that Congress considered to have met its definition of professional degree for the purposes of higher loan limits. So, the Department must consider what these degrees have in common and the context those commonalities provide.

Id.

Degrees on the example list in 34 CFR 668.2 may be fairly compared to any degrees not on the list. If any given degree is similar to degrees on the list, that provides additional evidence that the degree at hand may be a professional degree. If any given degree is dissimilar to degrees on the list, that provides evidence that the degree at hand may not be a professional degree. Of course, this comparative exercise is not dispositive; the degree must also meet the bounds of the operative test of professional degree to be categorized as such. This exercise of running the degree through the operative definition, then comparing and contrasting it to the list of degrees cited in 34 CFR 668.2, appropriately takes into account the broader statutory scheme and ensures that the Department interprets the statute in accordance with the intent.

During the negotiated rulemaking process, members of the RISE Committee provided several examples of degree programs and certain fields for consideration as to whether those would qualify in the same general class as those programs stated as examples of professional degrees.

Several members of the Committee suggested the Doctorate in Clinical Psychology as another specific example of a professional degree program, noting that such programs meet all of the criteria in the definition of

professional degree

in 34 CFR 668.2. Additionally, they noted that, in the definition of

qualifying graduate program

in 34 CFR 668.2, Clinical Psychology programs are specifically included with other professional degree programs requiring postgraduate training to obtain licensure, including medicine (M.D.), dentistry (D.D.S. or D.M.D.), and osteopathic medicine (D.O.), and therefore are in the same class as these programs which are also specifically identified as professional degree programs.

Committee members also noted that a doctorate in Clinical Psychology is explicitly required for licensure to practice as a clinical psychologist in every state.

Further, several members of the Committee suggested using the Classification of Instructional Programs

(CIP) (a system originally developed by the Department's NCES for tracking and reporting fields of study and program completion activity) to identify additional degree programs that meet the definition of

professional degree

in 34 CFR 668.2. The CIP is an integral part of institutions' annual IPEDS data reporting of professional degree and other programs, as every postsecondary school that receives Federal student aid funds must use CIP codes to report their program data to the government. The CIP is the accepted Federal government standard on instructional program classifications and is used in a variety of education information surveys and databases, as well as by State agencies, national associations, academic institutions, and employment counseling services for collecting, reporting, and analyzing instructional program data.

6

6

See Introduction to the Classification of Instructional Programs: 2020 Edition (CIP-2020),

Nat'l Cent. For Educ. Statistics, at 1

https://nces.ed.gov/ipeds/cipcode/Files/2020_CIP_Introduction.pdf

.

The CIP coding taxonomy, for instructional programs is organized on three levels: (1) A two-digit series of 48 general fields that groups a large number of related programs; (2) A four-digit series nested within each two-digit series which represent groupings of programs that have comparable content and objectives, within those two-digit fields; (3) A six-digit series which assigns unique six-digit codes to specific instructional programs. Six-digit CIP codes are the most specific program classifications under the taxonomy and institutions participating in the title IV, HEA programs are required to report completion data in IPEDS for each of their programs using the six-digit CIP code.

Id,

at 2. In some cases, instructional programs may be found in one or more series. For instance, a person can receive a degree in Statistics from a program that focuses on mathematical models; this program would be coded under code 27.0501 (Statistics, General). On the other hand, a person can receive a degree in Statistics from a program which focuses on the applications of statistical methods to the description, analysis, and forecasting of business data; this degree would be coded under code 52.1302 (Business Statistics).

7

7

See Frequently Asked Questions for CIP website and CIP Wizard 2020,

Nat'l Cent. For Educ. Statistics, Aug, 2020 at 2.

https://nces.ed.gov/ipeds/cipcode/files/CIP_FAQ_Document_2020.pdf#page=2.

CIP codes generally apply to all levels of certificates and degrees. In some cases, however, degrees were specified in the examples for certain CIP codes in which Federal agencies needed to be able to obtain data on the number of degrees awarded in a particular field of study. For example, CIP code 51.1201 (Medicine) lists Medicine (MD) as an example.

The Doctorate in Clinical Psychology and each of the 10 fields and associated degrees identified in the definition of

professional degree

in 34 CFR 668.2 has a unique six-digit CIP code in the current CIP taxonomy. Members of the Committee suggested that the scope of the professional degree program defined in the proposed regulation include programs that meet the requirements for professional degree that are within the intermediate four-digit grouping of programs for each of these six-digit CIP codes, as assigned by the institution or determined by the Secretary. We agreed with the Committee members that such an approach would accurately include other advanced degree programs in these 4-digit intermediate CIP groupings that met all requirements for a professional degree as defined in 34 CFR 668.2. Under the proposed regulations, such advanced programs would be considered in the general class with the professional degree programs in Clinical Psychology and the fields and degrees identified in the

professional degree

definition.

The Department believes 4-digit CIP groupings are the most appropriate level for classifying programs for two reasons.

Specifically, NCES defines 2-digit CIP codes as “the most general groupings of related programs.” Comparatively, the 4-digit CIP series is defined as “groupings of programs that have comparable content and objectives.”

8

After examining the groupings, the Department believes that using 4-digit CIP groupings are closely related to the examples of professional programs listed in CFR 668.2 to qualify for the higher loan limits.

8

National Center for Education Statistics (2020). “Introduction to the Classification of Instructional Programs: 2020 Edition.”

https://nces.ed.gov/ipeds/cipcode/Files/2020_CIP_Introduction.pdf.

To provide an illustrative example, the proposed rule allows all programs with the 4-digit CIP code “01.80” to qualify for the higher loan limits. In this case, there is just one such program in the 4-digit CIP grouping 01.80: Veterinary Medicine. However, if all programs in the same 2-digit CIP family were used, programs that are not connected to a professional practice would be included, such as “Horticulture Science” (01.01.03), “Plant Sciences” (01.11.01), “Soil Chemistry” (01.12.02), “Brewing Science” (01.10.03), and “Dairy Science” (01.09.05), to name a few.

Veterinary medicine is categorically different from these other types of agricultural programs. The National Center for Education Statistics describes a veterinary medicine program as “a program that prepares individuals for the independent professional practice of veterinary medicine, involving the diagnosis, treatment, and health care management of animals,” while describing, for example, a horticultural science program as “a program that focuses on the scientific principles related to the cultivation of garden and ornamental plants, including fruits, vegetables, flowers, and landscape.”

9

Given the substantial difference in a program that prepares individuals to medically treat animals and a program that trains students on scientific principles related to gardening, the Department believed it would be illogical to include all programs sharing the same 2-digit CIP family.

9

National Center for Education Statistics (2020). “Classification of Instructional Programs—Browse CIP Codes.”

https://nces.ed.gov/ipeds/cipcode/browse.aspx?y=55.

In the Department's view, the explicit incorporation of a four-digit program CIP code into the regulatory definition of “professional degree” is not inconsistent with the statutory definition. Indeed, it would make explicit what is already implicitly a common element among the statute's illustrative examples of professional degrees. Furthermore, the CIP code taxonomy has administrative benefits for the Department and institutions given its wide use that make its use practically convenient. In sum, adopting this element would ease administrative burden and is consistent with the statutory framework.

During negotiated rulemaking, the Department also considered whether other degree programs met, or did not meet, the definition of

professional degree

used in 34 CFR 668.2 for the purposes of defining the term professional student. During negotiations with non-Federal negotiators, we considered and discussed whether a wide range of degree programs met the operative test, taking into consideration the context of the broader statute. A substantial discussion centered around the need for workers in specific fields, however, the definition of

professional degree

used in 34 CFR 668.2 considered only the characteristics of the program and the requirements of the profession; it did not consider the need for workers in a given field. Congress did not instruct

the Department to take need into account when determining which programs are eligible for the higher loan limits. Therefore, the Department only considers its own historical practice, the characteristics of the existing programs, and the requirements of the profession when determining which degree programs did not meet the

professional degree

definition. Finally, the Department is hesitant to classify degrees that lead to employment that must be supervised by a licensed professional, and cannot be performed independently, as professional degrees within this definition. Although this decision may be subject to public critique and unpopular, it is once again informed by the characteristics of programs in 34 CFR 668.2.

During negotiations and as part of public comment, the Department heard from many who claimed that certain degree programs should be considered professional degree programs for the purposes of the higher Direct Loan limits under the OBBB. The Department considered these programs and found that the following degree programs did not meet the

professional degree

definition for one or more reasons:

Business (MBA):

The Department determined that an MBA would not satisfy the

professional degree

definition because it is not required for entrance into a specific profession, nor is there an accompanying licensure for MBA graduates. While the coursework a student completes while obtaining an MBA may satisfy certain prerequisite licensure requirements (such as the completion of 150 credit hours of coursework, which is required to obtain licensure as a certified public accountant)

10

an MBA is not explicitly required for licensure in any field.

10

See

CPA Review: CPA Exam Requirements,

https://www.becker.com/blog/cpa/150-credit-hours-cpa-a-tale-of-courses-and-creative-counting

(last visited Dec. 19, 2025)).

Education (M.Ed./Ed.D./Ed.S.):

The Department determined that the M.Ed. and Ed.D. would not satisfy the

professional degree

definition because they are not required for entrance into a specific profession and are not required for licensure. While several states require teachers to ultimately obtain a master's degree to maintain their license, no state requires an M.Ed. (or similar master's degree) to begin work as a teacher. Likewise, while an Ed.D. may offer the possibility of career advancement to the degree holder, the degree is not in any way required for entrance into a specific profession or a prerequisite for licensure in a field.

Occupational therapy (MSOT/OTD):

The Department determined that an MSOT or OTD would not satisfy the

professional degree

definition because, for example, the degree is not specifically required to enter the field. Boards, though not states, may include an MSOT or OTD as one possible condition for eligibility for licensure, but an individual may also be eligible to sit for the boards necessary to obtain licensure if they have a bachelor's or a master's in a related field.

11

Therefore, an MSOT or OTD is not required to enter the profession in the same manner as the enumerated professional degrees.

11

Am I eligible to take the NBCOT exam?,

Nat'l Bd. For Certification in Occupational Therapy,

https://www.nbcot.org/get-certified/eligibility#usa

(last visited Dec. 23, 2025).

Naturopathic medicine (N.D.):

The Department determined that an N.D. did not satisfy the

professional degree

definition because the regulatory landscape surrounding naturopathic medicine is unsettled. Currently, only 23 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands license naturopathic physicians.

12

Furthermore, the practice of naturopathy is explicitly banned in three states. Fla. Stat. § 458.305; S.C. Code Ann. § 40-31-10; and Tenn. Code Ann. § 63-6-205. While universal licensure of practitioners in a given field by every state is not required for a degree to be a

professional degree,

because of the fact that less than half of states license naturopathic physicians and some states ban the practice of naturopathy entirely, the Department determined that an N.D. cannot clearly be said to be required for entrance into a specific profession or lead to licensure at this moment in time.

12

Naturopathic Doctor Licensure,

Ass'n of Accredited Naturopathic Med. Colleges,

https://aanmc.org/licensure/

(last visited Dec.23, 2025).

Nursing (MSN/DNP):

The Department determined that neither the MSN nor the DNP would satisfy the

professional degree

definition because, for example, the degrees are not necessary for entrance into the nursing profession. While holders of an MSN or a DNP may obtain licensure as a nurse practitioner, students entering degree programs which lead to an MSN, or a DNP, are already licensed nurses when they begin the degree program.

13

Therefore, Department does not believe that the MSN or the DNP satisfy a core aspect of the definition of

professional degree.

13

The Path to Becoming a Nurse Practitioner (NP),

Am. Ass'n of Nurse Practitioners (Nov. 10, 2020)

https://www.aanp.org/news-feed/explore-the-variety-of-career-paths-for-nurse-practitioners.

Additionally, while the Department acknowledges that nurse practitioners engage in different forms of work than other nurses, the Department is hesitant to treat them as being distinct for the purpose of this regulation, primarily due to the fact that their practice authority (and therefore, their scope of work) differs substantially from state to state. For example, full practice authority states permit all nurse practitioners to evaluate patients; diagnose, order, and interpret diagnostic tests; and initiate and manage treatments, including prescribing medications and controlled substances, under the exclusive licensure authority of the state board of nursing, while restricted practice authority states require career-long supervision, delegation, or team management by another health provider in order for the nurse practitioners to provide patient care.

14

Because a substantial portion of states substantially restrict the types of work that can be performed by nurse practitioners and require them to be supervised by physicians, just as other nurses are, the Department believes that nurse practitioners cannot be said to be part of a distinct profession, meaning that the MSN and DNP are not requirements for entrance into a profession.

14

State Practice Environment,

Am. Ass'n of Nurse Practitioners,

https://www.aanp.org/advocacy/state/state-practice-environment

(last visited Dec. 19, 2025).

Finally, the Department does not believe that the statute permits the classification of degrees as “professional” when the degree leads to employment where the employee must be supervised by another professional who has, as required by their license and degree, more education, training, and qualifications than the person being supervised.

None of the state-required degrees in the illustrative list in the regulation that was codified by the OBBB require another profession to supervise their practice.

15

In that, the list provides support for the idea that professional degrees enable those who obtain them, after licensure, to practice in an unsupervised manner. As noted above, a substantial portion of states significantly restrict the types of work that can be performed by nurse practitioners and generally require them

to be supervised by or enter into formal collaboration agreements with physicians,

16

even in states where nurse practitioners have full practice authority (

i.e.,

where nurse practitioners are authorized to “evaluate patients, diagnose, order and interpret diagnostic tests and initiate and manage treatments—including prescribing medications—under the exclusive licensure authority of the state board of nursing”).

17

Such practice authority is often more limited in scope than that of medical doctors,

i.e.,

several states where nurse practitioners possess full practice authority preclude them from prescribing medications unless they have a formal relationship with a physician.

18

Likewise, a substantial portion of the states where nurse practitioners possess full practice authority condition a nurse practitioner's ability to exercise that authority on the nurse practitioner having completed a requisite number of “transition to practice hours” where the nurse practitioner must be supervised by a physician. This is very different from residency requirements in fields such as medicine, dentistry, and clinical psychology, where a resident is supervised by another member of their own profession.

19

For these reasons, the Department believes it would be inaccurate to classify an MSN or a DNP as meeting the definition of professional degree.

15

The following degrees are all, with appropriate licensure, sufficient for independent and unsupervised practice in all states in the relevant profession: 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 Clinical Psychology (Psy.D. or Ph.D.). The Department notes that states do not license, supervise, or regulate the practice of religion, including the licensure of clergy who may earn degrees in theology (M.Div., or M.H.L.).

16

Nurse Practitioner Practice and Prescriptive Authority,

Nat'l Conference of State Legislatures (last visited Dec. 29, 2025),

https://www.ncsl.org/scope-of-practice-policy/practitioners/advanced-practice-registered-nurses/nurse-practitioner-practice-and-prescriptive-authority.

17

Issues at a Glance: Full Practice Authority,

Am. Ass'n of Nurse Practitioners (last visited: Dec. 29, 2025),

https://www.aanp.org/advocacy/advocacy-resource/policy-briefs/issues-full-practice-brief#:~:text=States%20that%20restrict%20or%20reduce,standard%20of%20care%20set%20nationally.

18

See supra

n. 15.

19

Id. See

Deborah Dillon,

Do transition to practice hour requirements make a difference in adverse action and medical malpractice payment reports: An analysis from the National Practitioner Data Bank,

37 J. Am. Ass'n Nurse Practitioners 327 (June, 2025).

Physical therapy (DPT):

The Department determined the DPT would not satisfy the

professional degree

definition. The Department notes that historically, licensed therapists did not require doctoral degrees, and that the progression from a master's level degree to the DPT degree is a relatively modern development.

20

As a result, the Department has never included these degrees in the definition of professional degree. The adoption of the DPT in the physical therapy profession pre-dates the changes made to the definition in 34 CFR 668.2, yet the Department did not make updates to that definition as discussed above. This context is important, and the Department finds it to be dispositive regarding the interpretation. To that end, for the reasons cited above and because the Department's interpretation here has “remained consistent over time” and represents the “the longstanding practice of the government,” the Department does not think it is appropriate to expand the interpretation of professional degree here to include DPT.

See Loper Bright Enters.,

603 U.S. at 386;

NLRB

v.

Noel Canning,

573 U.S. 513, 525 (2014).

20

Plack, Margaret M PT, MA; Wong, Christopher K PT, MS, OCS. The Evolution of the Doctorate of Physical Therapy: Moving Beyond the Controversy. Journal of Physical Therapy Education 16(1):p 48-59, Spring 2002.

Physician assistant (MSPAS):

The Department determined that the MSPAS would not satisfy the

professional degree

definition because, for example, of the unsettled regulatory landscape regarding licensure and scope of practice of physician assistants. A physician assistant's scope of practice varies from state to state. While a handful of states allow physician assistants to practice and prescribe medication independent of physician supervision, the majority require a physician assistant to collaborate with (or be directly supervised by) a physician or other health care provider in order to practice and prescribe medication.

21

Additionally, of the five states that allow a physician assistant to practice independent of supervision by or collaboration with a physician, several only allow independent practice after the physician assistant has completed a requisite number of hours of postgraduate clinical experience in collaboration with a physician, which differs from residency requirements in fields such as medicine, dentistry, and clinical psychology, where the resident is supervised by another member of their own profession.

22

21

See Physician Assistant Practice and Prescriptive Authority,

Nat'l Conference of State Legislatures,

https://www.ncsl.org/scope-of-practice-policy/practitioners/physician-assistants/physician-assistant-practice-and-prescriptive-authority

(last visited Dec. 19, 2025).

22

Id.

As discussed above, the Department does not believe the statute permits the classification of degrees as professional where the degree leads to employment where the employee must be supervised by another licensed professional who is, by virtue of their licensure, more qualified or skilled than the person being supervised. This is because none of the degrees on the illustrative list in the codified definition of professional degree require another professional to supervise their practice. Therefore, because the overwhelming majority of states substantially restrict the practice of physician assistants and require them to collaborate with, or be supervised by, physicians, the Department believes it would be inaccurate to treat an MSPAS as a professional degree.

Public health (MPH):

The Department determined that the MPH would not satisfy the

professional degree

definition because, for example, it is not required for entrance into a specific profession and does not lead to licensure.

Social work (MSW/DSW):

The Department has determined that MSW and DSW would not meet the

professional degree

definition because neither degree is generally required to obtain an entry-level licensure in the social work field or to begin work in a profession. A person may obtain work as a social worker after earning a bachelor's degree.

23

Most states license BSW holders as certified social workers, making the baccalaureate level degree the one necessary to begin practice in the social work profession.

24

In addition, individuals who are licensed with a BSW may later obtain an MSW with only one year of additional coursework, for a total of five years of education compared to six years as provided for in the

professional degree

definition.

25

23

Social Work at a Glance,

Council on Social Work,

https://www.cswe.org/students/prepare-for-your-education/social-work-at-a-glance/

(last visited Dec. 19, 2025).

24

Id.

25

Id.

The Department is aware that individuals who have earned an MSW or DSW may obtain work as a clinical social worker, which allows an individual to perform similar work in a supervisory role or to take on heavier caseloads.

26

In some cases, a clinical social worker may perform work that is different than other social workers, but the Department does not believe the statute permits the classification of clinical social work as a separate and distinct profession, as opposed to a specialization or concentration.

27

26

Id.

27

Id.

Pilot Training and Licensure:

The Department considered whether students training to be pilots are professional students but found that these programs fail the operative test and are foreclosed upon due to compelling legislative history. Part 141 of title 14 is a statute administered by the Federal Aviation Agency concerning

the training and certification of airplane pilots.

There are “few principles of statutory construction are more compelling than the proposition that Congress does not intend

sub silentio

to enact statutory language that it has earlier discarded in favor of other language.”

I.N.S.

v.

Cardoza-Fonseca,

480 U.S. 421, 442-43, 107 S. Ct. 1207, 1219, 94 L. Ed. 2d 434 (1987) (quoting

Nachman Corp.

v.

Pension Benefit Guaranty Corporation,

446 U.S. 359, 392-393 (1980) (Stewart, J., dissenting)).

When the OBBB passed the House of Representatives (House), the bill contained borrowing limits on Direct Loans for both graduate and professional students. In defining professional students, the House provided that a professional student is a student: enrolled in a program of study that awards a professional degree upon completion of the program, or [. . .] provides the training described in part 141 of title 14, Code of Federal Regulations (or any successor regulation).

The Senate subsequently removed the reference to Part 141 of Title 14, replacing it with its own definition, which was subsequently agreed to by the House and enacted into law. In other words, Congress considered the notion that students enrolled in pilot training or degree programs could be professional students, but it discarded that concept in favor of other language.

This is the kind of legislative history that the court in

Cardoza-Fonseca

described as being among the most compelling principles to discern otherwise vague text. The exceptions in the operative test are narrow. Because pilot training programs generally do not require the completion of or training beyond what is normally provided for in a baccalaureate degree, these programs fail the operative test. To the degree there was any uncertainty, this legislative history sures up any lingering doubt. Congress considered adding pilot training in the House-passed version of the OBBB, but the Senate removed this language from the final version of the OBBB. Therefore, the Department cannot go against demonstrable evidence of Congressional intent by determining that students enrolled in pilot training programs are professional students for the purposes of higher loan limits when it is clear that Congress intentionally excluded them from the definition of

professional student.

In the definition of

program length

(Section 455(a)(8)(C) of the HEA), we included the term “full-time” as found in the statutory definition because we believe that Congress intended program length to be based on whatever is published in the institution's official publication and consistent to how program length is used in other title IV contexts (such as Student Right to Know disclosures in 34 CFR 668, subpart D). Therefore, the Department is including “full-time” in the definition of

program length.

Borrower Eligibility (§ 685.200)

Statute:

Section 81001(1)(C) of the OBBB amends Section 455(a)(3)(C) of the HEA by terminating graduate and professional students' eligibility for the Direct PLUS Loan program for any period of instruction beginning on or after July 1, 2026.

Current Regulations:

Section 685.200 contains the regulations on borrower eligibility for the Direct Loan Program, which are comprised of the following components: the Direct Subsidized Loan Program; Direct Unsubsidized Loan Program; Direct PLUS Loan Program; and the Direct Consolidation Loan Program. Section 685.200(b) provides the eligibility criteria for student PLUS borrowers (

i.e.,

graduate or professional students) including whether the student is enrolled, or accepted for enrollment, on at least a half-time basis at an eligible institution; the student is an eligible student under the requirements in 34 CFR part 668; if applicable, the student meets the requirements of receiving a loan despite obtaining a total and permanent disability discharge and is qualified to obtain a college or career education by completing a high school education in a homeschool setting or meets an ability-to-benefit alternative; the student has received a determination of their annual loan maximum eligibility under the Direct Unsubsidized Loan Program and, for periods of enrollment beginning before July 1, 2012, the Direct Subsidized Loan Program; and, the student does not have adverse credit.

Proposed Regulations:

The Department proposes to restructure the regulations at § 685.200(b) to provide the eligibility criteria for a Direct PLUS Loan to student PLUS borrowers. First, the Department proposes to revise § 685.200(b)(1) to provide that a graduate student or professional student is eligible to receive a Direct PLUS Loan only if the student meets the enumerated criteria in § 685.200(b)(1)(i) through (v). The Department further proposes to redesignate current § 685.200(b)(1) through (5) as § 685.200(b)(1)(i) through (v), respectively.

Second, the Department proposes adding a new § 685.200(b)(2)(i) to provide that beginning on July 1, 2026, a graduate student or professional student may not borrow a Direct PLUS Loan. The Department proposes adding § 685.200(b)(2)(ii) as an exception to the rule that prevents graduate or professional students from borrowing a Direct PLUS Loan under § 685.200(b)(2)(i). A graduate student or professional student may borrow a Direct PLUS Loan during the period of the student's expected time to credential, if the student is enrolled in a program of study at an institution as of June 30, 2026; and, a Direct Loan was made to the student for such program of study prior to July 1, 2026.

Finally, the Department proposes to add § 685.200(b)(3) that provides that if the student withdraws or otherwise ceases to be enrolled in the program of study at any point after receiving the exception under § 685.200(b)(2)(ii), that student cannot borrow a Direct PLUS Loan. In other words, the regulation allows a borrower who is enrolled in a program of study and who has participated in the Direct Loan Program to continue to participate in the program on the same terms until they complete their degree or withdraw. This is often referred to as “grandfathering” current participants under those same terms and conditions. The grandfathering provisions do not apply to any student who withdraws, even if they subsequently reenroll in the same program.

Reasons:

These regulations are amended to reflect the changes made by the OBBB to phase out the Graduate PLUS Program. Accordingly, our proposed regulatory restructuring in § 685.200(b)(1) would allow graduate and professional students to continue to borrow under the Direct PLUS Loan program before July 1, 2026, or if they meet the limited exception for current borrowers further discussed below. The regulatory restructuring in § 685.200(b)(2)(i) would make clear that beginning on or after July 1, 2026, a graduate student or professional student may not borrow a Direct PLUS Loan to conform with the changes the OBBB made to the HEA.

Because Section 455(a)(3)(C) of the HEA contains an interim exception whereby a graduate student or professional student could obtain a Direct PLUS Loan on or after July 1, 2026, we included regulations at § 685.200(b)(2)(ii) explaining the terms and conditions for borrowing loans under this exception. A borrower who withdraws or otherwise ceases to be enrolled would lose continued eligibility for the Direct PLUS Loan program under this interim exception. As such, to distinguish between

withdrawals and leaves of absence, we included a cross-reference to a withdrawal or ceasing to be enrolled in accordance with § 668.22. This cross-reference preserves certain borrowers' eligibility under the interim exception, such as a borrower who is a servicemember called to active-duty and receives a leave of absence from their institutions because of military orders. In this case, the servicemember would not be subject to the new loan limits and would continue to have access to Direct PLUS Loans.

Additionally, under the OBBB, if a graduate student received a Direct Unsubsidized Loan for enrollment in a graduate program before July 1, 2026, they would be eligible for the interim exception for continued enrollment in that same program after July 1, 2026.

Obtaining a Loan (§ 685.201)

Statute:

Section 81001(1)(C) of the OBBB amends Section 455(a)(3)(C) of the HEA by phasing out graduate and professional students' eligibility for the Direct PLUS Loan program for any period of instruction beginning on or after July 1, 2026. Section 455(a)(8) of the HEA lists the conditions under which graduate and professional students may continue to access Direct PLUS Loans during the interim exception period.

Current Regulations:

Section 685.201 includes regulations on how a borrower obtains a Direct Loan. Section 685.201(b) provides the application criteria for a Direct PLUS Loan and § 685.201(b)(2) specifies that for a graduate or professional student to apply for a Direct PLUS Loan, the student must complete a Free Application for Federal Student Aid (FAFSA®) and complete a Direct PLUS Loan master promissory note (MPN).

Proposed Regulations:

To implement the changes to Section 455(a)(3)(C) of the HEA, we propose to redesignate current § 685.201(b)(2) as § 685.201(b)(2)(i) with a clause that paragraph (b)(2)(i) applies to graduate or professional students applying for a Direct PLUS Loan before July 1, 2026. We further propose to add § 685.201(b)(2)(ii) to provide that on or after July 1, 2026, a graduate student or professional student may only apply for a Direct PLUS Loan if the student meets the exception in § 685.200(b)(2)(ii). That exception allows Direct PLUS Loan eligibility for a graduate student or professional student during the period of the student's expected time to credential, if the student is enrolled in a program of study at an institution as of June 30, 2026, and, a Direct Loan was made for such program of study prior to July 1, 2026.

Reasons:

The proposed regulations reflect the changes enacted in the OBBB. To conform with Section 455(a)(3)(C) of the HEA regarding the termination of the authority to make Direct PLUS Loans to graduate students and professional students, the Department has proposed regulations at § 685.201 to outline when a graduate student or professional student may apply for a Direct PLUS Loan for a period of enrollment that begins on or after July 1, 2026.

The Department proposes to make a technical correction under § 685.201(b)(2). During negotiated rulemaking, the RISE Committee reached consensus on the draft regulations in § 685.201. Due to an administrative error, the Department believes that § 685.201(b)(2) requires subparagraphs (i) and (ii) to distinguish borrowers' access to Direct PLUS Loans before and after July 1, 2026. The consensus language in § 685.201 did not distinguish borrowers' access to Direct PLUS Loans before and after July 1, 2026. In subparagraph (b)(2)(i), we propose to add “Before July 1, 2026,” to make clear that subparagraph applies before that date. In subparagraph (b)(2)(ii), we are not adding any additional text but instead redesignate to that appropriate subparagraph level. Accordingly, we revised current § 685.201(b)(2) to proposed § 685.201(b)(2)(i) which would read as follows: “Before July 1, 2026, for a graduate or professional student to apply for a Direct PLUS Loan, the student must complete a Free Application for Federal Student Aid and submit it in accordance with instructions in the application. The graduate or professional student must also complete the Direct PLUS Loan MPN.” Proposed § 685.201(b)(2)(ii) would read as follows: “On or after July 1, 2026, a graduate student or professional student may only apply for a Direct PLUS Loan if the student satisfies the conditions set forth in § 685.200(b)(2)(ii).” We believe separating these provisions at the subparagraph level would make clear that, beginning on July 1, 2026, graduate and professional students may only obtain a Direct PLUS Loan if they meet the interim exception requirements.

Loan Limits (§ 685.203)

Statute:

Section 81001(1)(A) and (B) of the OBBB amends Section 455(a)(3) and (4) of the HEA to include new annual limits of Direct Unsubsidized Loans for graduate and professional students for periods of enrollment beginning on or after July 1, 2026. Section 81001(2) of the OBBB adds Section 455(a)(4)(B) to the HEA to provide the aggregate limits of the amount of Direct Unsubsidized Loans graduate students and professional students may receive for periods of enrollment beginning on or after July 1, 2026. Section 81001(2) of the OBBB adds Section 455(a)(5) to the HEA to establish new annual and aggregate limits of Direct PLUS Loans parent borrowers may receive beginning on or after July 1, 2026. Section 81001(2) of the OBBB adds Section 455(a)(6) to the HEA and establishes a new lifetime maximum aggregate limit for the total amount of title IV loans. The lifetime cap is based upon the aggregate principal balance of all loans taken and would include origination fees but would not include any interest accrued. Section 81001(2) of the OBBB amends HEA Section 455(a) to add Section 455(a)(7)(A), which establishes an annual loan limit when a student is enrolled less than full-time in an academic year. Section 81001(2) of the OBBB added Section 455(a)(7)(B) to the HEA and provides additional rules regarding institutionally determined loan limits. Section 81001(2) of the OBBB added HEA Section 455(a)(8), which provides an interim exception under which loan limits that are effective July 1, 2026, do not apply.

Current Regulations:

Section 685.203 contains the regulations on loan limits in the Direct Loan Program. Section 685.203(b) and (c) provides the loan limits and additional eligibility for Direct Unsubsidized Loans; in the case of graduate or professional students for a loan period beginning on or after July 1, 2012, the annual loan limit may not exceed $8,500; however, § 685.203(c)(2)(v) provides additional eligibility for graduate and professional students in amounts up to $12,000 making a total annual limit of $20,500. Section 685.203(e) provides the aggregate limits for unsubsidized loans; in the case of graduate or professional students, the aggregate loan limit is $138,500.

Section 685.203(f) provides the Direct PLUS Loans annual limit; in the case of graduate or professional students, the annual limit that a graduate or professional student may borrow for a Direct PLUS Loan for an academic year may not exceed the student's cost of attendance less other financial assistance. Section 685.203(g) provides the Direct PLUS Loans aggregate limit; in the case of graduate or professional students, the aggregate limit that a graduate or professional student may borrow for a Direct PLUS Loan may not

exceed the student's cost of attendance less other financial assistance for the entire period of enrollment.

Finally, Section 685.203(j) provides the maximum loan amounts in the Direct Loan Program. The amount of Direct Loans that a borrower may receive cannot exceed the student's estimated cost of attendance minus other financial assistance.

Proposed Regulations:

The Department proposes to implement the changes enacted in Section 81001 of the OBBB by amending § 685.203. With respect to Direct Unsubsidized Loan limits, we propose to clarify in § 685.203(b)(2)(iii) that in the case of a graduate or professional student for a period of enrollment beginning on or after July 1, 2012, and ending on or before June 30, 2026, the total amount the student may borrow for any academic year of study under the Direct Unsubsidized Loan Program must not exceed $8,500. As explained above, § 685.203(c)(2)(v) provides additional Direct Unsubsidized Loan eligibility for graduate and professional students to $12,000, making a total annual limit of $20,500. Similarly, we propose to clarify in § 685.203(c)(2)(v) that in the case of a graduate or professional student for a period of enrollment through June 30, 2026, the additional Direct Unsubsidized Loan eligibility would be $12,000. We propose to add § 685.203(b)(2)(iv), which would provide the loan limits for graduate students and professional students for periods of enrollment beginning on or after July 1, 2026.

Specifically, a graduate student, who is not a professional student, for a period of enrollment beginning on or after July 1, 2026, may borrow up to $20,500 for any academic year under the Direct Unsubsidized Loan Program. A professional student, for a period of enrollment beginning on or after July 1, 2026, may borrow up to $50,000 for any academic year under the Direct Unsubsidized Loan Program. These loan limits, however, would not apply for certain borrowers who are grandfathered into the prior loan limits. Specifically, we propose to add § 685.203(b)(2)(iv)(B) that the loan limits in effect on July 1, 2026, would not apply to student borrowers during the period of the student's expected time to credential if the student is enrolled in a program of study at an institution as of June 30, 2026, and a Direct Loan was made prior to July 1, 2026, for such program of study. Under proposed § 685.203(b)(2)(iv)(C), this exception to the loan limit would not apply if the student withdraws in accordance with the regulations in § 668.22 for returning title IV funds or otherwise ceases to be enrolled in the program of study at any point after receiving the exception.

With respect to the aggregate loan limits for Direct Unsubsidized Loans, we propose to amend § 685.203(e)(3) to provide that for a graduate or professional student for periods of enrollment beginning before July 1, 2026, their aggregate loan limit is $138,500. This amount includes any loans for undergraduate study, minus any Direct Subsidized Loan, Subsidized Federal Stafford Loan, and Federal Supplemental Loan for Undergraduate Students (SLS) Program loan amounts, if applicable. We propose to add § 685.203(e)(4) to include the aggregate loan limits for a graduate student for a period of enrollment beginning on or after July 1, 2026. Specifically, a graduate borrower who is not and has never been a professional student at an institution would have an aggregate loan limit of $100,000. A graduate student who is or has been a professional student at an institution would have an aggregate loan limit of $200,000, minus any amount borrowed as a professional student. We also propose to add § 685.203(e)(5) that would provide, for a professional student, for a period of enrollment beginning on or after July 1, 2026, their aggregate loan limit would be $200,000, minus any Direct Subsidized Loan, Subsidized Federal Stafford Loan, and Federal SLS Program loan amounts and any amounts such student borrowed as a graduate student, if applicable. Similar to the earlier example, these aggregate loan limits would not apply in certain circumstances. We propose to add § 685.203(e)(6) that the loan limits in effect on July 1, 2026, would not apply to graduate student or professional student borrowers during the period of the student's expected time to credential if the student is enrolled in a program of study at an institution as of June 30, 2026, and a Direct Loan was made prior to July 1, 2026, for such a program of study. Under proposed § 685.203(e)(7) this exception to the aggregate loan limit would not apply if the graduate student or professional student withdraws in accordance with the regulations about the return of title IV funds in § 668.22 or otherwise ceases to be enrolled in the program of study at any point after receiving the exception.

With respect to the annual loan limits for Direct PLUS Loans, we propose to clarify the annual limits before July 1, 2026. We propose to amend § 685.203(f)(1) to provide that the total amount of all Direct PLUS Loans that a parent, or parents, may borrow on behalf of each dependent undergraduate student, or that a graduate or professional student may borrow, for any academic year of study for a period of enrollment beginning before July 1, 2026, must not exceed the cost of attendance minus other estimated financial assistance for the student. This provision maintains the current lifetime loan limits under current regulations at § 685.203(f) for these existing borrowers, while providing a date after which these limits will be phased out for new loans. We also propose to add to § 685.203(f)(2), the annual limits for parents of dependent undergraduates on or after July 1, 2026. Specifically, we propose to add new language to § 685.203(f)(2)(i) stating that for periods of enrollment beginning on or after July 1, 2026, the total amount of all Direct PLUS Loans that all parents may borrow on behalf of each dependent student for an academic year of study may not exceed $20,000, minus other financial assistance for the student. Similar to the earlier examples, these Direct PLUS annual loan limits would not apply in certain circumstances. We propose to add a new paragraph, § 685.203(f)(2)(ii), that provides that the loan limits in effect on July 1, 2026, would not apply to parent borrowers who borrowed a loan on behalf of a dependent student during the period of the student's expected time to credential if the following conditions are met: (1) the student is enrolled in a program of study at an institution as of June 30, 2026, and, (2) a Direct Loan was made to the parent borrower on behalf of the dependent student or to a dependent student prior to July 1, 2026, for such a program of study. Under proposed § 685.203(f)(2)(iii), this exception to the Direct PLUS annual loan limit would not apply to the parent borrower if the student withdraws in accordance with the regulations in § 668.22 about returning title IV funds or otherwise ceases to be enrolled in the program of study at any point after receiving the exception. Under proposed § 685.203(f)(3), the Direct PLUS annual limits for graduate students and professional students on or after July 1, 2026, would be found in § 685.200.

With respect to the aggregate limits for Direct PLUS Loans, we propose to provide for aggregate limits before July 1, 2026. We propose to amend § 685.203(g)(1) to provide that the total amount of all Direct PLUS Loans that a parent or parents may borrow on behalf of each dependent student, or that a graduate or professional student may borrow for a period of enrollment beginning before July 1, 2026, for enrollment in an eligible program of

study must not exceed the student's cost of attendance minus other estimated financial assistance for that student for the entire period of enrollment. We also propose to add aggregate limits for parents of dependent undergraduates on or after July 1, 2026. Specifically, we propose to add § 685.203(g)(2), which provides that for periods of enrollment beginning on or after July 1, 2026, the total amount of all Direct PLUS Loans that all parents may borrow on behalf of each dependent student must not exceed $65,000, without regard to any amounts repaid, forgiven, canceled, or otherwise discharged on any such loan. We would also provide that any amount of loan funds that have been returned by the institution, or the borrower, will not count against the aggregate loan limit. Similar to earlier examples, these Direct PLUS aggregate loan limits for parent borrowers would not apply in certain circumstances. We propose to add § 685.203(g)(3) that the loan limits in effect on July 1, 2026, would not apply to parent borrowers during the period of the student's expected time to credential if the student is enrolled in a program of study at an institution as of June 30, 2026, and a Direct Loan was made to the parent borrower on behalf of the dependent student, or to the dependent student prior to July 1, 2026, for such a program of study. Under proposed § 685.203(g)(4) this exception to the Direct PLUS aggregate loan limit would not apply to the parent borrower if the student withdraws in accordance with the return of title IV funds in § 668.22 or otherwise ceases to be enrolled in the program of study at any point after receiving the exception. We also propose to clarify that, for the purposes of the Direct PLUS aggregate loan limits, a student who changes majors within the same degree or certificate program remains enrolled in the same program of study. This includes a student enrolled in a bachelor's degree program who changes majors but remains enrolled in a bachelor's degree program at the same institution. Students are generally not admitted to undergraduate institutions in a manner that binds them to a specific major; they can switch majors without generally seeking new admittance to the institution. As such, they are in the same program of study for the purposes of this grandfathering provision. On the contrary, it would not include a student who is enrolled in an associate's degree program, but who transfers into a bachelor's degree program even if the student remains at the same institution or even in the same program. In comparison to undergraduate school, graduate and professional school admittance is significantly different. Students in a graduate program cannot generally switch to a different degree program without submitting a new application for admittance. As such, when they switch graduate programs, they are switching programs of study, even if they are attending the same institution. Accordingly, graduate or professional students who change programs would not be grandfathered into the aggregate loan limits. Under proposed § 685.203(g)(6), the Direct PLUS aggregate limits for graduate students and professional students for periods of enrollment beginning on or after July 1, 2026, would be found in § 685.200.

With respect to the maximum loan amounts, we propose to add the lifetime maximum aggregate limits that would be effective July 1, 2026. We propose to add § 685.203(j)(2), which would provide that effective July 1, 2026, the lifetime maximum aggregate amount of all title IV loans that a student may borrow, excluding Federal PLUS loans or Federal Direct PLUS Loans, would be $257,500 without regard to any amounts repaid, forgiven, canceled, or otherwise discharged on such loans. We propose that any amount of loan funds that have been returned by the institution, or the borrower, would not count against this lifetime maximum aggregate loan limit. Similar to the earlier examples, this lifetime maximum aggregate loan limit would not apply to certain students who are grandfathered into the old system. As such, we propose to add § 685.203(j)(3), which would provide that the loan limits effective on July 1, 2026, would not apply to student borrowers during the period of the student's expected time to credential if the student is enrolled in a program of study at an institution as of June 30, 2026, and a Direct Loan was made for such program of study prior to July 1, 2026. Under proposed § 685.203(j)(4) this exception to the lifetime maximum aggregate loan limit would not apply to the borrower if the student withdraws in accordance with the return of title IV funds regulations in § 668.22 or otherwise ceases to be enrolled in the program of study at any point after receiving the exception.

We also propose to add a new provision to determine the appropriate loan limit if a certain academic program awards both a graduate degree and professional degree. Under proposed § 685.203(l), if a student is enrolled in a program that awards both a graduate degree and professional degree, the student would be considered a professional student for the purposes of loan eligibility if more than 50 percent of the credit hours in that academic program count toward the professional degree. Specifically, this calculation is based upon the entire course of study and does not need to be calculated during each academic term. A student may be a professional student notwithstanding whether the student's courseload for a given semester is comprised of more than 50 percent of the credits that count toward a professional degree.

Finally, we propose to add two new loan limit provisions in proposed § 685.203(m) including an annual award year loan limit provision for less than full-time enrollment and a provision for institutionally determined loan limits. Under proposed § 685.203(m)(1), if a student is enrolled in an eligible program (except for a non-term program) at an institution on a less than a full-time basis during an academic year, the amount of any Direct Loan that student may borrow for an academic year or its equivalent would be reduced in direct proportion to the degree to which that student is not so enrolled on a full-time basis, as of the date the institution determined the student's eligibility for the disbursement, rounded to the nearest whole percentage point. The formula to determine the reduced annual loan limit percentage is equal to the number of credit hours enrolled for an academic year divided by the number of credit hours considered full-time (by that institution) for that academic year for the program of study and then multiplied by 100.

Under proposed § 685.203(m)(1)(i), for a period of enrollment of less than an academic year (

i.e.,

fall semester only), the institution would be required to calculate the Direct Loan eligibility that student may borrow for the term in which the borrower is enrolled, or its equivalent, in direct proportion to the degree to which that student is not so enrolled on a full-time basis for that term as determined by the institution.

The steps an institution would be required to take include:

• Determine the borrower's eligibility for a disbursement of a Direct Loan for the term;

• Calculate the amount of the academic year loan limit under this section that the term represents; and

• Reduce the borrower's Direct Loan amount based on less than full-time enrollment for that term at that institution.

The formula to determine the term's loan limit equals the number of credit hours enrolled for the term divided by the number of credit hours that is considered full-time at that institution (as determined by the institution) for

that term for the program of study; multiply that value by 100, which equals the percentage of the reduction that should be applied to the single term loan amount the borrower is eligible to receive (

e.g.,

student is enrolled 6 hours and 12 hours is considered full-time. Take 6 hours and divide that by 12 hours which equals .5. Then, take .5 and multiply it by 100 and that equals 50 percent. Fifty percent, rounded to nearest whole percentage point, if needed, equals the percentage of the scheduled reduction required). You would then take that percentage and multiply it by the amount of eligibility the borrower has for one term to determine amount of the loan the borrower may receive. If the annual amount was $3,000; one term of loan eligibility prior to the reduction would be $1,500. Multiply $1,500 by .5, which equals $750. Therefore, the amount the borrower is eligible to receive based on the schedule of reductions for less than full-time enrollment = $750.

Finally, we propose to add § 685.203(m)(2), which would provide that beginning on July 1, 2026, an institution may limit the total amount of Direct Loans that a student, or a parent on behalf of such student, may borrow for a specific program of study for an academic year, as long as any such limit is applied consistently to all students enrolled in that program of study. An institution that chooses to limit borrowing under this provision would be required to document their decision and follow standard requirements for record retention. The institution would also be required to provide clear and conspicuous information describing any program of study that is subject to the loan limitation and explain the need for such limitation to current and prospective students, including, but not limited to, sharing information via publication in the institution's course catalog, publication on institution's website(s), and award notifications. We propose that prior to limiting borrowing under this provision, the institution would be required to notify any student who plans to enroll or is enrolled in the program that is subject to this limitation. Additionally, the Department would propose that, for the purposes of the institutionally determined loan limits, program of study means eligible program.

Reasons:

In general, Section 81001 of the OBBB amended Section 455(a) of the HEA and established the new loan limits for borrowers. Due to these statutory changes to the loan limits, the Department proposes to make conforming changes to the regulations as further discussed below.

To help guide readers, we are providing a high-level summary of the statutory changes to the loan limits in a chart shown below. These new loan limits take effect on July 1, 2026.

BILLING CODE 4000-01-P

EP30JA26.000

EP30JA26.001

EP30JA26.002

BILLING CODE 4000-01-C

With respect to annual and aggregate limits for Direct Unsubsidized Loans for graduate and professional students, because of the statutory changes to the HEA, the Department's proposed regulations codify the new Direct Unsubsidized Loan annual and aggregate limits based on whether the borrower is a graduate student or professional student. We discuss the definitions of

graduate student

and

professional student

elsewhere in this document.

The Department wishes to make a technical correction under § 685.203(e)(4)(ii). During negotiated rulemaking, the RISE Committee reached consensus on the draft regulations in § 685.203. However, after reviewing the statute, the Department determined that § 685.203(e)(4)(ii) needed to be amended. Section 81001(2) of the OBBB added Section 455(a)(4)(B)(i)(II)(bb) to the HEA to state that for a period of enrollment beginning on or after July 1, 2026, the aggregate limit for a graduate student who is (or has been) a professional student at an institution, is $200,000, minus any amounts such student borrowed as a professional student. The consensus language in § 685.203(e)(4)(ii) erroneously stated that the aggregate limit for a graduate student who is or has been a professional student at an institution, is $200,000, minus any amounts such student borrowed as a graduate student. In subparagraph (e)(4)(ii), we propose to replace “graduate” with “professional” to make clear that it is minus any amounts such student borrowed as a professional student to accurately reflect the statute. Accordingly, we revised proposed § 685.203(e)(4)(ii) to read as follows: “(ii) who is or has been a professional student at an institution, $200,000, minus any amounts such student borrowed as a professional student.” We believe making this technical correction would make clear that, for a period of enrollment beginning on or after July 1, 2026, the aggregate limit for a graduate student who is or has been a professional student at an institution, is $200,000, minus any amounts such student borrowed as a professional student.

While this is a minor, technical change, the Department complied with the requirements in 20 U.S.C. 1098a(b)(2), which requires the Department whenever making a change from the consensus regulatory text to “provide a written explanation to the participants in that [negotiated rulemaking] process why the Secretary has decided to depart from such agreements.”

During negotiated rulemaking, the Committee discussed joint degree programs, in which a student earns both a graduate and a professional degree upon completion, such as a joint MBA and JD program. In response, the Department set the baseline that if more than 50 percent of the credit hours count toward the professional degree, the student would be considered a professional student for purposes of higher loan limits. As the Department explained during the first week of negotiations, the Department was concerned about the potential for abuse where graduate degree programs could be disguised as professional degree programs in order to gain access to the higher loan limits. Section 81001(c)(ii) of the OBBB provides that a “professional student” means a student enrolled in a program of study that awards a professional degree. The Department believes looking holistically at the academic program to determine whether the majority of the program counts toward the professional degree would allow us to assess the appropriate loan limit. In this case, we propose that if more than 50 percent of the credit hours count toward the professional degree, it would render such program a professional degree program. This is because if over 50 percent of the credits from a program are being earned toward a professional degree, the preponderance of a student's academic work is on earning a professional degree. The Department believes when most of a student's time is focused on professional credits, that it is sufficient to classify the student as a professional student for the purposes of the Direct Loan Program. The Department construes the phrase “enrolled in a program of study that awards a professional degree” in this context to mean a student who is spending more than half of their coursework working toward a professional degree. If a student is spending less than half of their coursework working toward a professional degree, most of their time is spent on a non-professional program. To allow any student enrolled in professional degree coursework, without considering what percentage of a student's total enrollment the professional coursework represents, to be considered a professional degree contravenes the intent of the statute by enabling students to enroll in such programs but not make serious attempts at taking the necessary coursework required to complete the program, while working primarily on a graduate degree program. The Department seeks comments on alternative approaches on how to classify joint degree programs for the purposes of Direct Loan eligibility.

Regarding the interim exceptions, we note that Section 455(a)(8) of the HEA contains obligatory terms and says the loan limits “shall not apply” if certain criteria are met, and accordingly, a borrower does not have the option to choose whether the new loan limits would apply to them. Students who meet the interim exception in proposed § 685.203(b)(2)(iv)(B) would be subject to the legacy loan limit provisions in Section 455(a)(3)(A)(ii) of the HEA. As an illustrative example, a professional student who enrolled in a program of study on or after July 1, 2026, is eligible for a Direct Unsubsidized Loan limit of $50,000 per year, but a professional student who was enrolled in the same program of study before that time (and

remains enrolled in that program of study at the same institution), would be subject to the legacy loan limit of $20,500 per year.

We also note that if a borrower withdraws or ceases to be enrolled in the eligible program at the same institution, the interim exception would no longer apply as the exception is only available to borrowers who remain enrolled in a program of study as required by Section 81001 of the OBBB. If a borrower withdraws, the borrower is no longer enrolled. And the borrower would then be subject to the loan limits in § 685.203(b)(2)(iv)(A), if the borrower were to re-enroll or matriculate at another institution. As such, we believe including a cross reference to a withdrawal as described in § 668.22 is instructive to borrowers. This policy would preserve certain borrowers' access to the interim exception, such as a borrower who is a servicemember called to active-duty and takes a leave of absence due to her military orders. In this case, she would not be subject to the loan limits in § 685.203(b)(2)(iv)(A).

The Department's proposed regulations codify new Direct PLUS Loan annual and aggregate limits for parent borrowers found in the OBBB. We also preserve the annual and aggregate limits for Direct PLUS Loans for periods of enrollment beginning before July 1, 2026. Separately in this NPRM, we discuss how the OBBB terminates graduate and professional students' access to the Direct PLUS Loan program for any period of instruction beginning on or after July 1, 2026.

Section 455(a)(5)(B) of the HEA provides that the aggregate limit for parent borrowers is $65,000 per dependent student, without regard to any amounts repaid, forgiven, canceled, or otherwise discharged on any such loan. The Department believes Congress' intent in using the words “without regard to any amounts repaid, forgiven, canceled, or otherwise discharged on any such loan” was to make certain that only the loan funds the borrower actually received are included in the aggregate limit. For example, students who received a false certification discharge for identity theft did not actually receive loan funds. The Department would not include loan amounts discharged under false certification in the parent borrower's aggregate limit and, similarly, we would not include loan amounts discharged under false certification in the lifetime maximum aggregate limit in § 685.203(j).

The OBBB also established a new lifetime aggregate limit; following, the Department has proposed regulations here to codify the new lifetime maximum aggregate limit. As part of the regulations on lifetime limits, the Department will make certain that only funds actually received by the borrower will count toward this lifetime aggregate limit. To enforce this principle, as a high-level overview, the Department would review all amounts disbursed minus any amounts that were returned by the institution or the borrower. We included a provision in § 685.203(j)(2) proposing that any amount of loan funds that have been returned by the institution, or the borrower, will not count against that borrower's lifetime maximum aggregate loan limit. Because the borrower did not receive the benefit of those funds that were returned to the Secretary, we believe those amounts should not be counted toward this lifetime maximum aggregate limit so that we remain consistent with historical precedent.

The OBBB also introduces a loan limit for borrowers who are enrolled on a less than full-time basis. The Department proposes to codify the Direct Loan eligibility on a less than full-time enrollment basis and a corresponding schedule of reductions. Section 455(a)(7) of the HEA requires the Secretary to publish a schedule of reductions for institutions to calculate the student's Direct Loan eligibility for the purposes of determining the amount of loan funds the borrower is eligible to receive for the `less than full-time enrollment status' provision. Therefore, the Department's regulations at § 685.203(m)(1) would provide additional information about these provisions and serve as the example of the schedule of reductions for students enrolling less than full-time.

Consistent with the OBBB, the proposed regulations include a formula that uses the number of credit hours in which the student is enrolled for the academic year divided by the number of credit hours that constitute full-time enrollment, as determined by the institution, for that academic year in the student's program of study, expressed as a percentage. The resulting percentage is then applied to the student's annual loan limit for that academic year. This proposal would implement Congress's direction that the annual loan limit be reduced in direct proportion to the student's enrollment status, rather than allowing a student who attends only part of the year or at reduced enrollment to receive the same annual loan amount as a full-time student.

The RISE Committee discussed the formula for less than full-time enrollment in detail and walked through several examples of how to properly apply this formula. The Department explained during negotiations that the language contained within this NPRM explicitly sets the required annual loan-limit for when a borrower enrolls less than full-time in the academic year. The Department explained that, in addition to this loan limit, a borrower must also meet all other eligibility criteria to receive a Federal student loan. The OBBB intentionally created an academic year requirement and not a per-term or per-disbursement schedule. We made the formula easily translatable to what the institution defines as full-time for the academic (award) year and easily divisible by the relevant number of terms. For an undergraduate student, current section 668.2 defines full-time as at least 24 credit hours. Using 24 credit hours as the baseline for full-time and factoring in enrollment for the complete academic year, an undergraduate borrower who enrolls nine hours in the fall and fifteen hours in the spring would be considered as full-time for the academic year and would be eligible for the full amount of eligibility and not subject to a reduction for less than half-time, which would equal 50 percent of the annual loan limit. A student's maximum disbursement eligibility for each term will be equal to the proportion of the full academic year and reduced by the percentage the student is enrolled less than full-time.

Section 455(a)(7)(A) of the HEA applies to the loan amount “for an academic year, or its equivalent.” The proposed text in § 685.203(m)(1) includes a corresponding formula for determining the proportion of the annual loan limit that applies to a single term at the receiving institution and then applying the less than full-time reduction to that amount in order to address situations in which a loan period is shorter than a full academic year such as when a student transfers mid-year.

The Department, in negotiations, also clarified situations relevant to a borrower who transfers enrollment to a different institution and how the new annual loan limit should be applied to the subsequent term of enrollment. The Department also walked through example schedules of reductions. For these transfer students, the new institution would determine what share of the academic year loan limit that term represents; and then reduce the Direct Loan based on the student's enrollment status in that term. The institution would use the schedule of reductions formula for the term of enrollment, which takes the number of credits

enrolled in that term for that program of study divided by the total number of credits that the institution considers full-time enrollment for that term in the program. This structure provides institutions with a clear, formula-based method for applying the statutory requirement to the portion of the annual loan limit for which it is disbursing. Institutions are familiar with the common practice of adjusting a student's aid package to reflect one term of enrollment or awarding aid to a student who has transferred from one institution to another. The concept of determining aid for one semester is not new. As such, creating the schedule of reductions for one term of enrollment was the appropriate action to address the new annual loan limit for less than full-time enrollment for students who fluctuate their attendance between institutions or only enroll in one term.

During negotiations, the Department answered several questions about the application of the schedule of reductions across differing academic calendars and payment period structures. These questions were relevant to the scope of regulations at § 685.203(m)(1), and the Department discusses the applicability of the schedule of reductions to programs contained in these regulations below. For non-term clock hour and credit-hour programs, the Department believes existing title IV disbursement rules are already tightly linked to academic progress. Students in these programs generally may not receive subsequent disbursements until they complete the required number of clock or credit hours, and institutions calculate payment periods and disbursements based on hours completed rather than fixed terms of time.

During the second week of the RISE Committee, the Department discussed the application of the schedule of reductions for students who are enrolled in subscription-based programs. Under a subscription-based program, the first two subscription periods of the programs are treated as terms for purposes of the title IV, HEA fund disbursements and there is no requirement for a student to complete a specified amount of coursework before receiving the disbursement for the second subscription period. However, in the third and subsequent subscription periods, disbursements are treated similarly to clock-hour and other non-term programs. Students in such programs cannot receive subsequent disbursements until they have earned the credits associated with the period, so the amount of loans a student can receive is already constrained by their actual pace and enrollment. Given that none of the non-Federal negotiators had specific experience with subscription-based programs, we removed reference to such programs in the regulations for schedule of reductions and are seeking specific feedback from institutions that use this type of academic calendar during the public comment period. The Department welcomes all relevant feedback on such programs and the relevancy of the schedule of reductions, or whether additional provisions are necessary to specifically address unique aspects of subscription-based programs. Specifically, we invite comments that ponder how the schedule of reductions would work at a subscription-based institution.

Section 455(a)(7)(A) of the HEA also ties the reduction to the student's enrollment status as of the date the institution determines the student's eligibility for a disbursement. A cross-reference to the general disbursement rules in § 668.164(b)(3) is also included. Under § 668.164, before each disbursement of title IV funds, an institution (or its third-party servicer) must confirm that the student is eligible, including confirming the student's enrollment status for that payment period.

The Department's proposed regulations therefore require institutions to apply the schedule of reductions formula using the student's actual enrollment at the time of disbursement, not just the enrollment that was anticipated when the institution originally packaged the annual loan. In the RISE Committee discussions, the Department explained that institutions typically build an award package based on the student's intended full-time enrollment for the academic year, but before a second or subsequent disbursement, as is already required, the school must re-check enrollment status to determine eligibility for the second or subsequent disbursement. If the student is enrolled for fewer credits than full-time at that point, the institution must reduce that disbursement so that the total loan for the academic year reflects the student's actual enrollment status. Likewise, if the student withdrew or dropped credits after the first disbursement that caused the student to be enrolled less than full-time for that term, the institution must reduce the subsequent disbursement in accordance with the schedule of reductions formula to make certain the student's annual amount disbursed is equal to the student's enrollment status.

By anchoring the reduction to the disbursement eligibility date in § 668.164(b)(3), the regulations ensure that:

• students who remain full-time across the academic year may still receive the full annual loan limit;

• students whose enrollment falls below full-time before a disbursement will have their annual loan amount reduced in proportion to their updated enrollment; and

• institutions are not required to predict future enrollment beyond what they already do under the existing aid packaging process.

This approach reflects the RISE Committee's concern that part-time and less than full-time students should receive the amount of loan eligibility they “earn” based on their enrollment over the academic year, while avoiding retroactive recalculations that would be difficult to administer and confusing for borrowers.

The Department's proposed regulations would codify the institutionally determined loan limits established in the OBBB. Financial aid administrators have long supported this approach as a means of helping to prevent borrowers from incurring unreasonable levels of debt.

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Institutions already have the authority under § 685.301(a)(8), on a case-by-case (or student-by-student) basis, to reduce a Direct Loan or choose not to originate a loan. However, the new institutionally determined loan limit regulations provide further flexibility as to when, and how, an institution may limit borrowing under the new OBBB statutory authority. Additionally, the Department's proposed regulations in § 685.203(m)(2)(ii) through (iv) provide requirements to ensure the Department complies with the statutory requirements and that institutions provide borrowers with adequate information about the programs that may be subject to institutionally determined loan limits, thereby

providing borrowers with information to make informed choices.

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National Association of Student Financial Aid Administrators,

NASFAA Issue Brief: Loan Limits

(Feb. 2018) (recommending institutional authority to limit loans);

Keeping College Within Reach: Examining Opportunities to Strengthen Federal Student Loan Programs,

Hearing Before the Subcomm. on Higher Educ. and Workforce Training, H. Comm. on Educ. and the Workforce, 113th Cong. (2013) (questions submitted for the record noting NASFAA's Debt Task Force recommendation to allow colleges to limit students' loan eligibility); Ben Barrett & Amy Laitinen,

Off Limits: More to Learn Before Congress Allows Colleges to Restrict Student Borrowing

(New America, May 2017) (describing institutional and trade association support for expanded loan-limiting flexibility); National Association of Student Financial Aid Administrators,

Ability to Limit Loans: NASFAA Membership Survey

(May 2019) (reporting survey results on institutional interest in borrowing-limit authority).

By requiring institutions to document their decision and follow customary record retention requirements, the Department would be able to examine if the institution is applying their policy consistently to all students enrolled in that academic program. Furthermore, an institution would be required to notify students prior to limiting a current or prospective student's eligibility for a Direct Loan. We believe that these additional measures help ensure transparency in the process and would allow students to make an informed decision on whether to continue in their academic program or seek other means to finance their education.

The Department believes that the institution's decision to reduce the loan limit for a specific program of study would occur before the start of the new academic year so that there is adequate time to notify current and prospective students who enroll in that program prior to those students being subjected to the reduced loan limit.

Section 428H of the HEA and Loan Limits for Certain Health Professionals

Section 428H(d)(2)(A) of the HEA established loan limits for Federal Unsubsidized Stafford Loans made to graduate, professional, and independent postbaccalaureate students prior to July 1, 2010, and the HEA authorized the Secretary to increase loan limits for students “engaged in specialized training requiring exceptionally high costs of education.” Under this authority, the Secretary previously increased the aggregate loan limits for graduate and professional students enrolled in certain approved health profession programs (as defined by Section 703(a) of the Public Health Act). The Department first published these increased limits in DCL 98-L-209 (August 1, 1998). The Department last updated the increased limits in 2008 (DCL GEN-08-04 (April 18, 2008)).

Section 455(a)(1) of the HEA provides that “loans made to borrowers under Part D of the HEA shall have the same terms, conditions, and benefits, and be available in the same amounts, as loans made to borrowers, and first disbursed on June 30, 2010 under sections 428, 428B, 428C, and 428H” of the HEA, “unless otherwise specified in this part.” Section 455(a)(4) of the HEA, added by the OBBB, established new annual and aggregate limits for Federal Direct Unsubsidized Stafford Loans made to graduate and professional students “beginning on July 1, 2026.” Because the limits set forth in Section 455(a)(4) explicitly apply to all Federal Direct Unsubsidized Stafford Loans made to graduate and professional students on or after July 1, 2026, including those enrolled in health profession programs, the increased annual and aggregate loan limits established by the Secretary for graduate and professional students enrolled in certain approved health profession programs will not apply to loans made on or after July 1, 2026.

Notwithstanding the aforementioned, graduate and professional students enrolled in certain approved health profession programs and who meet the criteria for the interim exception under proposed § 685.203(b)(2)(iv)(B) regarding unsubsidized annual loan limits or § 685.203(e)(6) regarding unsubsidized aggregate loan limits will still be eligible for the increased loan limits during their expected time to credential. This is because the new loan limits effective on or after July 1, 2026, will not apply to these borrowers so long as they remain enrolled in their program of study. Consequently, they will retain access to the loan limits for loans made before July 1, 2026, including the increased unsubsidized loan amounts due to the high-cost nature of their program of study through the interim exception period. While a longstanding and widely used definition, the Department is aware that the definition of “professional student” has caused some confusion. The Department particularly invites commenters to suggest alternative terminology for this and related terms to ensure it is clear that this provision was designed by Congress to reduce borrowing for certain types of students and is not a value judgement about the professional nature of programs or occupations themselves.

Deferment (§ 685.204)

Statute:

Section 82002 of the OBBB amends Section 455(f) of the HEA, titled “Deferment; Forbearance,” to sunset the authority for unemployment and economic hardship deferments for new Direct Loans while preserving these deferments for existing borrowers.

Current Regulations:

Section 685.204 contains the regulations on deferments for Direct Loan borrowers. Section 685.204(f) provides the eligibility criteria, including the timeframes in which the borrower may receive an unemployment deferment. Section 685.204(f) further provides the borrower qualifications, including the manner on how to apply for an unemployment deferment and other rules that pertain to borrowers receiving an unemployment deferment.

Section 685.204(g) provides the eligibility criteria for the economic hardship deferment, including the cumulative maximum periods a borrower may receive an economic hardship deferment and the periods of time in which the Secretary grants an economic hardship deferment.

Proposed Regulations:

The Department proposes to restructure the regulations at § 685.204(f)(1) to provide the eligibility criteria for an unemployment deferment based on loan disbursement date. We propose to redesignate current § 685.204(f)(1) as § 685.204(f)(1)(i) and provide that for loans disbursed before July 1, 2027, a borrower is eligible for an unemployment deferment during periods that, collectively, do not exceed the three years in which the borrower is seeking and unable to find full-time employment. We further propose to add new § 685.204(f)(1)(ii) to provide that for loans disbursed on or after July 1, 2027, a borrower may not receive an unemployment deferment. We also propose to add “the” after “For” in § 685.204(f)(3).

The Department proposes to restructure the regulations at § 685.204(g)(1)(i) and (ii) to provide the eligibility criteria for an economic hardship deferment based on the loan disbursement date. Specifically, we propose to revise the current § 685.204(g)(1)(i) to provide that for Direct Loans disbursed before July 1, 2027, a borrower is eligible for economic hardship deferments that, collectively, do not exceed three years. We further propose to redesignate current § 685.204(g)(1)(ii) as § 685.204(g)(1)(iii). Finally, we propose to add a new § 685.204(g)(1)(ii) to provide that for Direct Loans disbursed on or after July 1, 2027, a borrower may not receive an economic hardship deferment.

Reasons:

The regulations are amended to reflect the changes made by the OBBB. Specifically, the OBBB provides that, for those borrowers with loans first disbursed before July 1, 2027, they may continue to receive unemployment and economic hardship deferments, subject to existing duration limits, but borrowers with loans first disbursed on or after that date are not eligible for those deferments. We note that an individual borrower could have split eligibility (

i.e.,

they could have a loan before July 1, 2027, which is eligible for unemployment deferment, and a loan on or after July 1, 2027, which would not be eligible for that same deferment). These statutory changes require conforming amendments to § 685.204 so that the Department's regulations on

deferment reflect the revised HEA framework and operate consistently with the OBBB repayment and hardship-relief system.

Current Section 685.204(f) and (g) provide unemployment and economic hardship deferments for eligible Direct Loan bo

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