The U.S. Department of Education on Thursday finalized a landmark rule change aimed at lowering college costs and overhauling student loan repayment, implementing key provisions of President Donald Trump’s Working Families Tax Cuts Act.
“The Trump Administration is focused on putting students and taxpayers first, which is why we are implementing durable policies to make higher education more affordable,” Under Secretary of Education Nicholas Kent said in a statement. Kent explained the reforms address exorbitant tuition, unchecked borrowing, and a confusing repayment system.
“For decades, students and families have been undermined by rising college costs and poor returns on investment,” the announcement noted.
The reformed rule, set for publication in the Federal Register on May 1, introduces new borrowing limits, simplifies repayment options, and establishes a new income-driven plan as the agency continues implementing broader higher education reforms signed into law on July 4, 2025.
Beginning this summer, the changes will eliminate the Grad PLUS program, impose reasonable annual and aggregate loan limits for graduate and professional students, allow institutions to set their own programmatic caps, and create a new Tiered Standard repayment plan alongside the Repayment Assistance Plan, which eliminates negative amortization. Officials project the reforms will save taxpayers $409 billion while reducing student loan debt by $224 billion by preventing overborrowing.
The announcement comes as the department operates under President Trump’s explicit directive to shrink its footprint.
In March 2025, Trump signed an executive order directing the agency to wind down operations to the maximum extent permitted by law and return education authority to states and local communities. Secretary Linda McMahon has described the department’s “final mission” as facilitating its own reduction, including staff cuts and the transfer of certain functions to other agencies.
Trump has long argued that the federal Department of Education, created in 1979, has contributed to bureaucratic waste and rising costs without improving outcomes. The administration’s ongoing efforts include significant personnel reductions and interagency shifts, even as core functions like federal student loans continue during the transition.
The final rule follows extensive negotiations and public input. The Reimagining and Improving Student Education (RISE) Committee reached consensus on several provisions in late 2025, and the department received more than 80,000 public comments on the proposed version released in January 2026. Most provisions take effect July 1, 2026.
Key statistics cited in the announcement illustrate the urgency for the reforms. The department noted college tuition has risen faster than any other major household expense over the past 40 years, total student loans have increased 343 percent since 2005, and student debt now exceeds combined credit card and auto debt. Graduate students hold over a third of federal student loan debt, with 40 percent of master’s programs showing a negative return on investment.
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Christina Botteri is the Executive Editor of The Tennessee Star and The Star News Network. Follow her on X at @christinakb.
I do not understand the mumble-jumble in this article attempting to explain the changes. I am totally against pussyfooting around with those who take out loans then want special treatment. It a debt and there should be FIXED terms for repayment.