How the Elimination of Grad PLUS Loans Becomes Law: The Rulemaking Process

President Trump signed the One Big Beautiful Bill Act (OBBBA) on July 4, 2025. The law eliminates Graduate PLUS Loans and caps borrowing for graduate and professional students, effective July 1, 2026.

The law is enacted, but the regulations aren’t final yet. The Department of Education has to translate the statute into specific rules through a formal rulemaking process. That process decides questions the law left open, like which degree programs count as “professional” (higher borrowing limits) and which get classified as “graduate” (lower limits).

Below is each step of that process, where it stands today, and what remains before the changes take effect.

What the OBBBA changed

Under the old system, graduate and professional students could borrow Direct Unsubsidized Loans up to $20,500 per year, then fill the remaining cost with Graduate PLUS Loans up to the full cost of attendance. There was no aggregate cap. A student in a program costing $80,000 a year could borrow the whole thing in federal loans.

The OBBBA changes three things:

1. Grad PLUS Loans are gone for new borrowers starting July 1, 2026.

2. New annual and aggregate caps replace the old system. The limits depend on whether a student is classified as “graduate” or “professional”:

3. Parent PLUS Loans are capped at $20,000 per year ($65,000 aggregate per student).

The classification matters a lot. A dental student (professional) can borrow up to $50,000 a year in federal loans. A nursing doctoral student (graduate) is capped at $20,500. The difference between what federal loans cover and what a program actually costs is the funding gap, which is what our research measures.

Which programs are “professional”?

The OBBBA defines “professional student” by pointing to an existing regulatory definition in 34 CFR 668.2. Through rulemaking, the Department proposed that professional degrees cover 11 fields, identified by 4-digit CIP codes:

Those 9 unique CIP codes cover about 38 specific programs. Clinical Psychology was the only addition to the original 34 CFR 668.2 list.

Not on the list: nursing (MSN/DNP), physical therapy (DPT), physician assistant (MSPAS), occupational therapy (MSOT/OTD), social work (MSW/DSW), education (M.Ed./Ed.D.), business (MBA), public health (MPH), and naturopathic medicine (N.D.). All of these get the lower $20,500 graduate cap.

The Department of Education estimates that 87% of postbaccalaureate student loan borrowers are in programs classified as graduate, not professional.

The 8-step rulemaking process

The Higher Education Act requires the Department of Education to follow a specific sequence before new regulations can take effect. WICHE’s Policy Tracker lays it out as eight steps:

Step 1: Notice of intent (July 25, 2025) ✓

The Department published a Federal Register notice announcing negotiated rulemaking committees and a public hearing. The 30-day comment period drew 1,864 written responses.

Step 2: Nominations and scheduling (July–August 2025) ✓

The Department collected nominations for the rulemaking committee and set meeting dates. A virtual public hearing on August 7, 2025 had 57 people testify.

Step 3: Negotiated rulemaking (September–November 2025) ✓

The RISE (Reimagining and Improving Student Education) committee met over nine days in Washington, DC. The committee included representatives from institutions, students, borrowers, state officials, loan servicers, taxpayer advocates, and legal aid groups. They reached full consensus on the entire regulatory package on November 6, 2025.

Step 4: OMB/OIRA review (November 2025–January 2026) ✓

The consensus text went to the Office of Information and Regulatory Affairs (within OMB) for review before publication.

Step 5: NPRM and public comment period (January 30 – March 2, 2026) ✓

The Notice of Proposed Rulemaking (NPRM) came out January 30, 2026: 93 pages covering loan limits, the professional student definition, new repayment plans, and related provisions. The comment period closed March 2 with over 60,000 submissions.

Step 6: OIRA review of final regulations (expected March–May 2026)

The Department reviews all substantive comments, drafts the final regulatory text, and sends it back to OIRA. They can change the proposed regulations based on what they heard.

Step 7: Publication of final rule (expected May–June 2026)

Final regulations must appear in the Federal Register at least 30 days before they take effect.

Step 8: Effective date, July 1, 2026

New loan limits and the Grad PLUS elimination go into effect for the 2026–2027 award year.

Why the timeline is compressed

The HEA’s “master calendar” normally requires final regulations by November 1 of the prior year for a July 1 effective date. The math didn’t work here: the OBBBA was enacted July 4, 2025, leaving 120 days until the November 1 deadline. The Department estimated rulemaking takes at least 149 days.

The Department’s position is that Congress implicitly waived the master calendar by setting a July 1, 2026 effective date that was impossible to hit through normal procedure.

What comes next

We’ll update this page as Steps 6, 7, and 8 play out. The open questions:

• Whether the Department changes the proposed regulations after reviewing 60,000+ comments
• The final regulatory text for the professional student definition
• Part-time student cap reductions (schedule to be published in the final rule)
• The exact effective date of the final rule

Resources

• NPRM: Reimagining and Improving Student Education (Federal Register, January 30, 2026) — full text of the proposed rule
• CRS Report R48768 (Congressional Research Service, February 24, 2026) — nonpartisan FAQ on the proposed “professional student” definition
• WICHE Policy Tracker — tracks the rulemaking progress through all 8 steps
• Gap Funding Group Research Report — our analysis of funding gaps across 7,000+ programs at nearly 2,000 universities

We cover the 2026 graduate funding changes as they develop. Sign up for updates below.