On January 30, 2026, the U.S. Department of Education (ED) published a Notice of Proposed Rulemaking (NPRM) that would implement the July 4, 2025 One Big Beautiful Bill Act’s (OBBBA) changes to federal student financial aid loan programs administered under Title IV of the Higher Education Act of 1965, as amended (HEA). The NPRM proposes new definitions applicable to federal student financial aid and amendments to rules on loan limits, income-based repayment options, rehabilitation, and other matters.
ED convened the Reimagining and Improving Student Education (RISE) negotiated rulemaking committee shortly after the OBBBA’s enactment to draft regulatory language consistent with the statutory changes. The RISE Committee concluded its work in November 2025, reaching consensus on proposed language, and ED published the consensus language in the NPRM.
Although the NPRM does not impose new Title IV administration or other obligations on institutions as such, it notably implements OBBBA changes that significantly impact the federal student loan amounts graduate students may receive to finance their education. The proposed rule is open for public comment until March 2, 2026. This advisory highlights certain aspects of the NPRM.
The changes are set to take effect July 1, 2026 (Waiver of the HEA Master Calendar)
Congress established the HEA master calendar to provide adequate notice of rules governing federal student financial aid and to provide for timely delivery of funds. The master calendar generally requires ED to issue final rules by November 1 in order for those rules to take effect by July 1 of the following year. Normally, that would mean the earliest the regulations at issue here could take effect would be November 1, 2027. However, in the OBBBA, Congress directed ED to implement the OBBBA’s federal student financial aid changes by July 1, 2026. ED determined that the OBBBA required ED to promulgate regulations to implement the changes because the OBBBA was not self-executing. ED contends in the NPRM that because it was impossible to satisfy the statutory requirements for negotiated rulemaking between July 4, 2025 and November 1, 2025 (i.e., between when the OBBBA became law and the HEA master calendar deadline), Congress implicitly waived the master calendar requirement with respect to this rulemaking. Accordingly, the NPRM confirms ED’s intention that the final regulations will take effect July 1, 2026.
New distinction between graduate students and professional students, and related loan limits
ED’s Title IV regulations currently use the term “graduate or professional student” as a category of students who are eligible for certain federal student financial aid programs, and, as a practical matter, existing loan limits generally did not factor in whether such a student could finance a program. The OBBBA adds two new terms that are now used to differentiate maximum borrowing limits for the Direct Loan Program – “graduate student” and “professional student.” Although “professional students” will have a higher loan limit, the caps are likely to have a much more significant effect as described in greater detail in the next section.
- The NPRM defines a “graduate student” as “[a] student enrolled in a program of study that is above the baccalaureate level and awards a graduate credential (other than a professional degree) upon completion of the program.” In other words, “graduate student” is the default rule.
- The NPRM defines a “professional student” as “[a] student enrolled in a program of study that awards a professional degree upon completion of the program.” It further clarifies that a professional degree is a degree that: (1) 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; (2) is generally at the doctoral level, and that requires at least six academic years of postsecondary education coursework for completion, including at least two years of post-baccalaureate level coursework; (3) generally requires professional licensure to begin practice; and (4) includes a four-digit program CIP code in certain specified fields. The NPRM limits professional degrees to the fields of pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry, theology, and clinical psychology.
The distinction is notable because under the OBBBA “professional students” have a higher borrowing limit as compared to “graduate students”. For graduate students, the OBBBA maintains existing loan limits of $20,500 annually for unsubsidized loans in the Direct Loan Program; for professional students enrolled on or after July 1, 2026, the OBBBA raises the annual limits to $50,000. The OBBBA also establishes new aggregate loan limits of $100,000 for graduate students and $200,000 for professional students, in addition to the amount borrowed for undergraduate education. If a graduate student has previously been a professional student or a professional student has previously been a graduate student, the student’s aggregate loan limit for their current program is $200,000 minus the amount borrowed for the previous graduate or professional program. The NPRM includes regulatory language to implement these changes.
The annual and aggregate loan limit rules apply to students who enroll in a graduate or professional program beginning on or after July 1, 2026. The new annual and aggregate loan limits do not apply to students during their expected time to earn a credential if the student enrolled in a graduate or professional program as of June 30, 2026 for which a Direct Loan was made prior to July 1, 2026.
Discontinuation of Grad PLUS Program and new loan limits
Consistent with the OBBBA, the NPRM would eliminate the availability of new Grad PLUS Loans under the Direct Loan Program effective July 1, 2026. Graduate students and professional students who enrolled in a program of study at an institution prior to June 30, 2026, may receive Grad PLUS Loans during their expected time to credential, if a Direct Loan was made to the student for that program of study prior to July 1, 2026, and the student remains enrolled in the program. If a student withdraws or ceases to be enrolled at any point, the student may no longer obtain a new Grad PLUS Loan.
Under the Direct PLUS Loan Program, graduate and professional students were able to borrow up to the full cost of attendance for a program of study, subtracting the amount of any other financial aid received. Under the OBBBA and NPRM, graduate students and professional students will be constrained to the respective annual and aggregate loan limits described above, as well as a lifetime maximum limit of $257,000 for all Title IV loans for undergraduate, graduate, and professional programs (excluding PLUS loans). Parent PLUS loans are now limited to $20,000 annually and $65,000 aggregate per student.
In addition, any student enrolled on less than a full-time basis will have their annual loan limit reduced proportionally. For example, if a student takes credits equal to 75% of full-time enrollment, that student’s annual loan limit will be reduced to 75% of the normal annual loan limit (i.e., a professional student will have an annual loan limit of $37,500 instead of the full $50,000 allowed by the OBBBA for full-time students.
Other provisions
The NPRM also addresses other aspects of the federal student financial aid loan programs affected by the OBBBA, including:
- Elimination of the Income-Contingent Repayment Plan option;
- Creation of two new repayment options – the Tiered Standard repayment plan and the income-based Repayment Assistance Plan;
- A second opportunity for loan rehabilitation in the Federal Perkins Loan Program, Federal Family Education Loan Program, and the Direct Loan Program; and
- Conforming changes to provisions on consolidation, deferment, forbearance, and Public Service Loan Forgiveness.
Next steps
ED is accepting public comment on the proposed rule through March 2, 2026. In addition, the Accountability in Higher Education and Access Through Demand-driven Workforce Pell (AHEAD) negotiated rulemaking committee completed its work on January 9, 2026 and reached consensus on proposed regulations. We anticipate that ED will soon issue a notice of proposed rulemaking for that regulatory package. Hogan Lovells’ Education Practice is available to assist institutions with navigating Title IV rules and obligations.
[View source.]
