New Education Department Rules on Graduate Loans

The Education Department revealed on Thursday a set of new regulations aimed at reducing borrowing for graduate students to make higher education “more affordable.”

One significant change is the elimination of the Grad PLUS loan program, which had previously allowed unlimited loans for graduate studies. This, according to the department, will help “control tuition increases.” Additionally, new “reasonable” loan limits will be established for graduate programs, along with income-based repayment plans.

“The Trump Administration prioritizes students and taxpayers, which is why we are rolling out policies to make higher education more accessible,” said Education Undersecretary Nicholas Kent. He noted that the President’s Working Families Tax Relief Act addresses longstanding issues like soaring tuition costs and confusing repayment options that often leave borrowers with larger debts.

Kent added, “This final rule is meant to ensure students can access higher education without accumulating excessive debt, offering repayment options that suit borrowers better, and compelling institutions to keep costs down.”

These changes are expected to take effect in July.

The government highlighted that rising tuition fees are being driven by excessive student loan borrowing, which has led to an increase of over 900% since the 1980s. Kent pointed out that capping loan amounts could pressure universities to stop raising tuition fees.

“It’s straightforward economics,” he remarked. “When more money is available, institutions tend to increase their prices.”

Looking ahead, the department will start involuntary collections on defaulted student loans in 2025, following a five-year suspension by the Biden administration. Currently, about 75% of borrowers are behind on their payments, with roughly 4 million facing severe delinquency.