Rule2026-08556
Reimagining and Improving Student Education-Federal Student Loan Program Final Regulations
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 1, 2026
Effective
July 1, 2026
Issuing agencies
Education Department
Abstract
The Secretary amends 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 Public Law 119-21, the Working Families Tax Cuts Act signed into law by President Trump on July 4, 2025. The Department previously referred to the Working Families Tax Cuts Act as the "One Big Beautiful Bill Act," including in the Notice of Proposed Rulemaking published on January 30, 2026. These changes include establishing new loan limits for graduate students, professional students, and parents, and phasing out the Graduate PLUS (Grad PLUS) Program. The Working Families Tax Cuts Act 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 establishing a new income-driven repayment plan known as the Repayment Assistance Plan. The Working Families Tax Cuts Act also enables borrowers in default who have previously rehabilitated a defaulted loan a second chance to rehabilitate their loan(s) and resume repayment.
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 84 (Friday, May 1, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 84 (Friday, May 1, 2026)]
[Rules and Regulations]
[Pages 23768-23901]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-08556]
[[Page 23767]]
Vol. 91
Friday,
No. 84
May 1, 2026
Part IV
Department of Education
-----------------------------------------------------------------------
34 CFR Parts 674, 682, and 685
Reimagining and Improving Student Education--Federal Student Loan
Program Final Regulations; Final Rule
Federal Register / Vol. 91, No. 84 / Friday, May 1, 2026 / Rules and
Regulations
[[Page 23768]]
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
34 CFR Parts 674, 682, and 685
[Docket ID ED-2025-OPE-0944]
RIN 1840-AD98
Reimagining and Improving Student Education--Federal Student Loan
Program Final Regulations
AGENCY: Office of Postsecondary Education, Department of Education.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Secretary amends 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 Public Law
119-21, the Working Families Tax Cuts Act signed into law by President
Trump on July 4, 2025. The Department previously referred to the
Working Families Tax Cuts Act as the ``One Big Beautiful Bill Act,''
including in the Notice of Proposed Rulemaking published on January 30,
2026. These changes include establishing new loan limits for graduate
students, professional students, and parents, and phasing out the
Graduate PLUS (Grad PLUS) Program. The Working Families Tax Cuts Act
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 establishing a new income-driven repayment
plan known as the Repayment Assistance Plan. The Working Families Tax
Cuts Act also enables borrowers in default who have previously
rehabilitated a defaulted loan a second chance to rehabilitate their
loan(s) and resume repayment.
DATES: This final rule is effective on July 1, 2026.
FOR FURTHER INFORMATION CONTACT: Tamy Abernathy, Office of
Postsecondary Education, 400 Maryland Ave. SW, 5th Floor, Washington,
DC 20202. Telephone: (202) 245-4595. Email: <a href="/cdn-cgi/l/email-protection#3e6a5f5347107f5c5b4c505f4a56477e5b5a10595148"><span class="__cf_email__" data-cfemail="9fcbfef2e6b1defdfaedf1feebf7e6dffafbb1f8f0e9">[email protected]</span></a>.
If you are deaf, hard of hearing, or have a speech disability and
wish to access telecommunications relay services, please dial 7-1-1.
A brief summary of these final regulations is available at
<a href="http://www.regulations.gov/docket/ED-2025-OPE-0944">www.regulations.gov/docket/ED-2025-OPE-0944</a>.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Abbreviations
II. Executive Summary
1. Summary of Major Provisions
2. Summary of Costs and Benefits
III. Purpose of This Regulatory Action
IV. Background
V. Authority for the Regulatory Action
VI. Analysis of Public Comment and Changes
1. Process for Out-of-Scope Comments
2. Public Comment Period
VII. Regulatory Analyses
1. Regulatory Planning and Review Including Regulatory Impact
Analysis
a. Need for Regulatory Action
b. Summary of Comments and Changes From the NPRM
c. Discussion of Costs, Benefits, and Transfers
d. Accounting Statement
e. Alternatives Considered
2. Regulatory Flexibility Act
3. Paperwork Reduction Act of 1995
4. Congressional Review Act Intergovernmental Review Assessment
of Education Impact Federalism
I. Abbreviations
APA: Administrative Procedure Act
CFR: Code of Federal Regulations
CIP Code: Classification of Instructional Programs Code
DL: Federal Direct Loans
E.O.: Executive Order
FFEL: Federal Family Education Loan Program
FSA: Federal Student Aid
Grad PLUS: Direct PLUS Loan made to graduate or professional students
HEA: Higher Education Act of 1965, as amended
IBR: Income-Based Repayment
ICR Plan: Income-Contingent Repayment plan
NPRM: Notice of Proposed Rulemaking
OIRA: Office of Information and Regulatory Affairs
PRA: Paperwork Reduction Act of 1995
PAYE: Pay As You Earn plan
PDF: Portable Document Format
Parent PLUS: Direct PLUS Loan made to parents of dependent
undergraduate students
PSLF: Public Service Loan Forgiveness
RAP: Repayment Assistance Plan
RFA: Regulatory Flexibility Act
RIA: Regulatory Impact Analysis
Title IV, HEA Programs: Student financial assistance programs
authorized under title IV of the HEA
rtf: Rich Text Format
RISE: Reimagining and Improving Student Education
SAVE Plan: Saving on a Valuable Education plan
SBREFA: Small Business Regulatory Enforcement Fairness Act of 1996
txt: text format
II. Executive Summary
The Secretary implements the amendments made to the HEA relating to
the Federal student loan programs made by Public Law 119-21, the
Working Families Tax Cuts Act, through these final regulations.
These regulations revise the Direct Loan Program under 34 CFR part
685 by amending the annual and aggregate loan limits for graduate,
professional, and parent loan borrowers. The regulations also implement
two new streamlined student loan repayment plans, the Repayment
Assistance Plan and the Tiered Standard repayment plan. The regulations
also make conforming amendments to current regulations on
consolidation, deferment, forbearance, and Public Service Loan
Forgiveness (PSLF). The regulations also provide borrowers in default a
second opportunity to rehabilitate their loans and resume repayment,
even if they previously rehabilitated a defaulted loan.
1. Summary of Major Provisions of This Regulatory Action
These final regulations:
<bullet> Amend Sec. Sec. 674.39, 682.215, and 682.405 to allow
loan rehabilitation up to twice per each loan borrowed under the
Federal Perkins Program, Federal Family Education Loan Program, and the
Direct Loan Program, up from only one.
<bullet> Amend Sec. 685.102 to include new definitions for the
following terms: expected time to credential, graduate student,
professional student, and program length.
<bullet> Amend Sec. 685.200 to include Direct PLUS Loan
eligibility for graduate and professional students.
<bullet> Amend Sec. 685.201 to establish the limited Direct PLUS
Loan eligibility for a graduate or professional student.
<bullet> Amend Sec. 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.
<bullet> Amend Sec. 685.204 to clarify conditions and borrower
eligibility for the unemployment deferment and the economic hardship
deferment.
<bullet> Amend Sec. 685.205 to establish the modified eligibility
criteria for borrowers to receive a forbearance.
<bullet> Amend Sec. 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.
<bullet> Amend Sec. 685.209 to establish terms for the Repayment
Assistance Plan and sunset ICR plans and conditions.
[[Page 23769]]
<bullet> Amend Sec. 685.210 to provide information to borrowers
about choosing a repayment plan.
<bullet> Amend Sec. 685.211 to establish miscellaneous repayment
provisions including the minimum payment increase for the Income-Based
Repayment (IBR) plan.
<bullet> Amend Sec. 685.219 to clarify that repaying under the
Repayment Assistance Plan will qualify for PSLF if all other
eligibility criteria are met.
<bullet> Amend Sec. 685.220 to provide terms and repayment plan
eligibility for consolidation loans.
<bullet> Amend Sec. 685.221 to clarify when a borrower may be
eligible for an alternative repayment plan.
<bullet> Amend Sec. 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.
The regulations in this final rule consider each change to be a
discrete change and independent from the other 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.''
2. Summary of Costs and Benefits
As further detailed in the Regulatory Impact Analysis (RIA), the
Department estimates a net budget impact compared to the President's
Budget baseline for FY 2026 of -$409.3 billion from cohorts 1994 to
2035 for all provisions except the professional student definition.
This is equivalent to an annualized reduction in transfers of -$42.3
billion at 3 percent discounting and -$44.3 billion at 7 percent
discounting. The professional student definition had an estimated net
budget impact of $537 million for loan cohorts 2027-2036 compared to
the President's Budget for PB2027 baseline, equivalent to $51 million
and $52 million at 3 percent and 7 percent discounting, respectively.
Additionally, we estimate annualized cost related to paperwork burden
($25.0/$37.2 million), administrative updates to Government systems
($10.4/$12.1 million), systems maintenance and operation costs ($7.4/
$7.8 million) and staffing ($5.5/$6.0 million) at 3 percent and 7
percent discounting, respectively.
As also further detailed in the RIA, these final regulations
provide benefits to students, borrowers, and taxpayers. These benefits
include potentially lower tuition costs for students, simplified
repayment terms for student loan borrowers, and lower costs for
taxpayers.
III. Purpose of This Regulatory Action
This regulatory action seeks to effectuate regulations that address
the statutory changes made by the Working Families Tax Cuts Act.
IV. Background
Public Law 119-21, which the Department refers to as the ``Working
Families Tax Cuts Act,'' was signed into law by President Trump on July
4, 2025. This landmark legislation makes extensive statutory changes to
fix broken and unnecessarily complex aspects of the Federal student
loan programs, specifically, in the areas of loan limits, repayment
plans, and related provisions in title IV of the HEA. Among other
changes, the Working Families Tax Cuts Act sets a new lifetime
borrowing cap ($257,500 for most borrowers), eliminates the authority
to disburse new Graduate PLUS Loans, limits borrowing under the PLUS
program for parents, maintains current annual limits under the Federal
Direct Stafford Loan Program for undergraduate and graduate students,
increases annual Federal Direct Stafford 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 Working Families Tax Cuts Act simplifies and
streamlines the current confusing patchwork of repayment plan options
for future borrowers to two flexible options: a new Tiered Standard
repayment plan for fixed monthly payments over a 10 to 25-year term,
and a new income-driven plan called the Repayment Assistance Plan that
allows borrowers the opportunity to actually pay down their student
loan debt by preventing negative amortization over the life of the
loan. Confusing, outdated (and in some cases, unlawful) repayment plans
are phased out, including the Income-Contingent Repayment plan (ICR),
Pay As You Earn plan (PAYE), and Saving on a Valuable Education plan
(SAVE), which has been held as unlawful in Federal court. See Missouri
v. Biden, 112 F.4th 531, 538 (8th Cir. 2024).
This final rule 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 Working Families Tax Cuts Act, the
Department convened the Reimagining and Improving Student Education
(RISE) negotiated rulemaking committee (Committee). The Committee was
composed of representatives from institutions, students and borrowers,
State officials, financial aid administrators, loan servicers, and
consumer and civil rights organizations. The Committee met over
multiple sessions with the first session being from September 29
through October 3, 2025, and the second session being held November 3-
6, 2025. The Committee reached consensus on the entirety of the
regulatory text. In accordance with the protocols established by the
Committee, the Department incorporated the regulatory amendatory text
that was mutually agreed upon into a Notice of Proposed Rulemaking
(NPRM) published on January 30, 2026. Building on the statutory and
regulatory history, the Committee's consensus language, and the public
comments received, this final rule amends Direct Loan regulations to
the changes enacted in the Working Families Tax Cuts Act 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 revised
statutory framework.
V. Authority for This Regulatory Action
Congress passed legislation that amended statutory provisions
governing programs administered by the Department, and this final rule
implements those changes in the Department's regulations. The Working
Families Tax Cuts Act 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 Working Families Tax Cuts Act. 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
[[Page 23770]]
student loan programs authorized by the HEA.
Waiver of HEA Master Calendar Requirements
Congress may waive, modify, or rescind requirements in the HEA and
Administrative Procedure Act (APA) that require the Department to
follow certain processes and procedures when engaging in informal
notice-and-comment rulemaking. 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).
At the same time, the court in Asiana Airlines made clear that the
APA requires ``clear intent'' from Congress to justify a departure from
the procedural requirements in the APA, noting that 5 U.S.C. 559
requires an explicit waiver of APA procedural requirements. Here, the
Department is complying with all of the requirements for informal
notice-and-comment rulemaking in 5 U.S.C. 553, so an express waiver is
not needed. The explicit waiver standard in 5 U.S.C. 559 only applies
to the procedural requirement of the APA and does not apply to the
Master Calendar provision in Section 482(c) the HEA. Had Congress
wished for the HEA Master Calendar provision to have the same rule of
construction as it does for procedural requirements of the APA, we
would have expected that Congress would either cross reference and
incorporate 5 U.S.C. 559 into the HEA or use similar language to 5
U.S.C. 559 within Section 482(c) of the HEA. Congress knows how to
create these types of special rules of construction when they want to,
and they declined to do so in Section 482(c) of the HEA.
Absent an explicit rule of construction in the HEA, we rely on the
ordinary tools of statutory interpretation to glean the meaning of the
statute. The Harmonious-Reading Canon provides that statutes should,
when possible, be interpreted in a way that renders them compatible,
not contradictory, but such an approach is not always possible if
context and other considerations (including the application of other
canons) make it impossible to do so, another approach to statutory
interpretation, such as the General/Specific Canon must be applied. See
Scalia & Garner, Reading Law, 155 (2012). The General/Specific Canon
dictates that, in cases where a general prohibition is contradicted by
a specific permission or a general permission that is contradicted by a
specific prohibition, the more specific of the two provisions controls.
Id. at 158. Because, as discussed below, the Working Families Tax Cuts
Act contains provisions with effective dates that cannot possibly be
implemented in regulation in accordance with the HEA's master calendar
requirements, and as such, implicitly provides a limited waiver of the
HEA's master calendar requirement, so far as it is necessary to
promulgate regulations that give effect to those provisions. See Dorsey
v. United States, 567 U.S. 260, 274 (2012) (stating that an agency's
compliance with an existing statute ``cannot justify a disregard of the
will of Congress as manifested either expressly or by necessary
implication in a subsequent enactment'' (quoting Great Northern R. Co.
v. United States, 208 U. S. 452, 465 (1908)).
Here, the Working Families Tax Cuts Act was enacted on July 4,
2025. The Working Families Tax Cuts Act 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 Working Families Tax Cuts Act.
Congress gave the Secretary discretion within the Working Families Tax
Cuts Act to implement the provisions impacting the title IV, HEA
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 title IV, HEA programs 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 Sec. 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 and meet APA requirements, 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, publish an NPRM (with at least a 30-day comment period), and
then publish a final rule that responds to any substantive comments
received. The fastest possible timeframe in which the negotiated
rulemaking process for the rulemaking packages assigned to the RISE
Committee could have occurred is 149 days, which is irreconcilable with
the timeline allowed by the enactment of the Working Families Tax Cuts
Act, due to the fact that there were 120 days from July 4, 2025, (the
day the Working Families Tax Cuts Act was enacted), through and
including 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 Working
Families Tax Cuts Act by July 1, 2026, which is the statutory effective
date. Congress was aware of this temporal impossibility when they
passed the Working Families Tax Cuts Act, 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 Working Families
Tax Cuts Act implicitly waives the master calendar.
With important details unanswered by the plain text of the Working
Families Tax Cuts Act, it is clear that the policy scheme set forth in
the HEA made by the Working Families Tax Cuts Act 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 Working Families Tax
Cuts Act provisions on July 1, 2026. Therefore, the Working Families
Tax Cuts Act does not waive negotiated rulemaking nor any provision in
the APA. For provisions in the Working Families Tax Cuts Act 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.
Severability
``It is axiomatic'' that a regulation may be invalid in part but
not in whole or as applied to one set of facts but not another. Ayotte
v. Planned Parenthood of N. New England, 546 U.S. 320, 329 (2006). If a
court finds one part of a regulation is unlawful, the ``normal rule''
is to enjoin only that part. Id. (quoting Brockett v. Spokane Arcades,
Inc., 472 U.S. 491, 504 (1985). It is the Department's intent that if
any provision of this subpart or its
[[Page 23771]]
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 shall not be affected thereby. Statutes and
regulations are severable if the separate provisions are ``wholly
independent of each other'' and can operate independently. Brockett v.
Spokane Arcades, Inc., 472 U.S. 491, 502 (1985). That is the case here.
No part herein will be affected if another part is found to be
unlawful. Nor does the Department believe courts or regulated parties
would be unable to apply the rule if one part is held invalid. C.f.
Dep't of Educ. v. Louisiana, 603 U.S. 866, 868 (2024) (per curiam)
(denying the government's request to stay a preliminary injunction
against an entire rule where only parts were found to be invalid
because ``schools would face in determining how to apply the rule for a
temporary period with some provisions in effect and some enjoined'').
In particular, the Department believes that the classification degrees
between ``professional'' or ``graduate'' degrees is severable. For the
reasons discussed in the rule, the Department is confident in how we
classified the degrees that commenters and negotiators argued were
``professional.'' However, if a court disagrees with our analysis, we
believe and intend that this portion of the regulation is entirely
severable and does not substantially impact any other portion of the
regulation or any other part of this final rule. Relatedly, if a court
disagrees with the Department's classification of a particular degree
or degrees, the Department intends for its classification of all other
degrees to survive and remain in effect.
VI. Analysis of Public Comment and Changes
On January 30, 2026, the Secretary published an NPRM for these
regulations in the Federal Register (91 FR 4254) (January 30, 2026).
The Department received 80,793 comments on the proposed regulations.
The Department has grouped the comments by the regulatory section and
by similar themes. We discuss substantive issues under the sections of
the regulations to which they pertain. In instances where individual
submissions appeared to be duplicates or near-duplicates of comments
prepared as part of a write-in campaign, the Department posted one
representative sample comment along with the total comment count for
that campaign to <a href="http://www.Regulations.gov">www.Regulations.gov</a>, which continues to be our
standard practice. We considered these comments along with all the
other comments received. In instances where individual submissions were
bundled together (submitted as a single document or packaged together),
the Department posted all the substantive comments included in the
submissions along with the total comment count for that document or
package to <a href="http://www.Regulations.gov">www.Regulations.gov</a>. Generally, we do not address minor,
non-substantive changes (such as renumbering paragraphs, adding a word,
or typographical errors) within this final rule. Additionally, we
generally do not address changes or comments recommended by commenters
that the statute does not authorize the Secretary to make (such as
forgiving all student loans), or comments pertaining to operational
processes. Analysis of the comments and of any changes in the
regulations since publication of the NPRM (91 FR 4254) follows.
1. Process for Out-of-Scope Comments
The Department does not typically address comments that are out of
scope. For purposes of this final rule, out-of-scope comments are those
that are not addressed in the NPRM (91 FR 4254) altogether. Generally,
comments that are outside of the scope of the NPRM (91 FR 4254) 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.
Public Comment Period
Comments: Several commenters requested the Department extend the
comment period and some requested we hold hearings so that students,
educators, and employers in counseling fields can testify regarding
real world impact of the proposed regulations on the mental health
profession, students, and the public.
Discussion: Prior to publishing the NPRM (91 FR 4254), the
Department solicited public input through a public hearing held on
August 7, 2025, from 9:00 a.m. to 4:00 p.m. Eastern Time, including a
lunch break from 12:00 p.m. to 1:00 p.m. All individuals who requested
to speak were accommodated during the hearing. The Department also
solicited public comments for 30 days and received 1,846 comments on
the public hearing notice, which informed the development of the
proposed regulations.
Following the public hearing, the Department convened a negotiated
rulemaking Committee in fall 2025, consistent with the requirements of
the HEA. The Department selected non-Federal negotiators representing
affected constituencies and stakeholders. This negotiated rulemaking
process provided additional opportunities for stakeholders to offer
feedback prior to publication of the NPRM (91 FR 4254).
After publication of the NPRM (91 FR 4254), the Department provided
a 30-day public comment period, which is consistent with the
Department's obligations under the APA. During that period, the
Department received 80,793 public comments, many of which included
detailed and substantive feedback. The Department carefully reviewed
these comments to determine whether clarification or revisions to the
final regulations were appropriate.
Although some commenters requested that the Department extend the
comment period or hold additional hearings, the Department believes
that the opportunities for stakeholder engagement, including the public
hearing, negotiated rulemaking sessions, and the NPRM (91 FR 4254)
comment period provided the public with sufficient opportunity to
comment on the proposed regulations.
Changes: None.
General Agreement With the Regulations
Comments: Many commenters supported the Department's proposed rule
and its broader efforts to reform the Federal student loan system.
Commenters stated that the current system has created long-term
financial challenges for many borrowers and that such reforms are
necessary to better align repayment structures with borrowers'
financial realities. These commenters noted that excessive student loan
debt may affect borrowers' ability to achieve financial stability,
including purchasing homes, starting families, or pursuing certain
career opportunities. Commenters supported reforms that would simplify
repayment options, improve borrower protections, and provide borrowers
with clearer and more manageable repayment options for their Federal
student loans.
Discussion: The Department appreciates the commenters' support for
the proposed rule and their perspectives regarding the need to improve
the Federal student loan system. As discussed in the NPRM (91 FR 4255),
the Department proposed these regulatory changes to implement the
Working Families Tax Cuts Act's statutory requirements and to improve
the clarity and administration of Federal student loan programs.
Simplifying repayment choices and improving borrower protections helps
borrowers better understand their repayment obligations and remain in
good standing on their loans.
Changes: None.
[[Page 23772]]
Comments: Several commenters supported provisions in the
regulations that would limit or restructure certain Federal student
loan programs, including changes affecting borrowing limits and loan
availability. These commenters stated that unlimited or excessive
borrowing may contribute to rising tuition prices and may result in
borrowers taking on debt that is difficult to repay relative to actual
earnings. Some commenters noted that certain graduate programs may lead
to relatively modest salaries and suggested that establishing
reasonable borrowing limits may encourage students to make more
informed borrowing decisions and encourage institutions to control
educational costs.
Discussion: The Department acknowledges commenters' views regarding
borrowing limits and the relationship between borrowing levels and
expected earnings. The Department notes that the regulatory provisions
in this rulemaking implement the statutory changes in the Working
Families Tax Cuts Act and are intended to support responsible borrowing
while maintaining access to Federal student loans. Taken together with
the other important changes made to the title IV, HEA programs, the new
regulatory framework established in these final rules supports program
integrity while continuing to provide the financial assistance needed
by students pursuing higher education.
Changes: None.
Comments: Other commenters discussed the importance of maintaining
access to Federal student aid programs for individuals seeking to
pursue or advance their education. These commenters stated that Federal
student loan programs play an important role in allowing students to
obtain professional credentials and access career opportunities that
may otherwise be financially out of reach. Some commenters also
emphasized the importance of ensuring that borrowers have access to
repayment options that are understandable and accessible so that
borrowers can successfully remain in repayment and avoid default.
Several commenters encouraged the Department to establish clear
guidance and implementation support for borrowers and institutions.
Discussion: The Department supports continued access to Federal
student aid for students with financial need and helping borrowers
successfully repay their loans and avoid default. The Department
believes these regulations balance the need to provide financial
support through the Federal student loan programs to students who may
otherwise be unable to access postsecondary education while also
providing necessary restrictions to prevent accumulation of debt a
borrower may never be able to repay. The Department will continue to
provide guidance and support to borrowers and institutions to
facilitate implementation of the regulatory changes, including
additional details on the two new repayment plans that streamline
repayment. The Department believes that the changes made in these final
regulations will help improve title IV, HEA program administration and
improve a borrower's understanding of their repayment obligations.
Changes: None.
General Opposition to the Regulations
Comments: Some commenters opposed the proposed regulatory changes
described in the NPRM (91 FR 4254). Commenters stated that the proposed
regulations could weaken borrower protections, increase financial
hardship, and make repayment less affordable. Commenters also expressed
concern that these changes could disproportionately affect borrowers
with low incomes and borrowers from historically underserved
communities. Some commenters asserted that the proposed changes could
discourage individuals from pursuing higher education or entering
certain professions.
Discussion: The Department appreciates the commenters' views
regarding the potential impact of the proposed regulatory changes on
borrowers. However, the Department proposed these changes to implement
the Working Families Tax Cuts Act statutory requirements and to improve
the administration and sustainability of the Federal student aid
programs. The Department believes the final regulations implement the
law while appropriately balancing borrower support with program
integrity considerations.
Changes: None.
Comments: Several commenters stated that the proposed changes could
increase financial hardship for borrowers who are also caregivers,
experiencing unemployment, illness, or other economic disruptions.
Commenters expressed concern that limiting borrower relief options
could reduce borrowers' ability to manage temporary financial
challenges.
Discussion: The Department recognizes that borrowers may experience
periods of financial hardship and acknowledges the importance of
certain safeguards in the repayment process that could provide
flexibility. The Department notes that the Federal student loan
programs continue to include repayment options designed to help
borrowers manage repayment obligations based on their financial
circumstances. Depending on the borrower's personal circumstances,
borrowers may enroll in various income-driven repayment plans,
forbearance, or deferments in accordance with the HEA.
Changes: None.
Comments: Some commenters stated that the proposed regulatory
changes could discourage individuals from pursuing higher education due
to concerns about Federal student loan borrowing limits, repayment
affordability, and financial risk.
Discussion: The final regulations are consistent with the Working
Families Tax Cuts Act's statutory requirements to curb excessive
borrowing and support the improved administration of the Federal
student loan programs. Contrary to the commenters' claims, the changes
in this final rule, such as the simplification of the confusing myriad
of borrower repayment plans, other complicated requirements, and
implementation of the new Repayment Assistance Plan, address long-
standing past criticisms and failures of the Federal student loan
programs.
Changes: None.
Comments: A commenter requested that the Department align
implementation of these regulations with the Administration's broader
goal of supporting American workers.
Discussion: The proposed regulations implement the statutory
framework enacted in the Working Families Tax Cuts Act and are
intended, among other objectives, to promote affordability, reduce the
risk of unmanageable borrowing burdens, and deliver measurable results,
thereby complementing and supporting key elements of the
Administration's America's Talent Strategy to reindustrialize the
United States.
Changes: None.
Negotiated Rulemaking
Comments: Some commenters expressed concerns about the integrity,
security, and reliability of the public comment submission process and
questioned whether comments would be reviewed in a transparent and
impartial manner. Commenters stated that some stakeholders may fear
professional repercussions for submitting dissenting views, which could
chill participation. Several commenters who submitted comments
anonymously requested assurances that comments would be protected,
verified, and meaningfully
[[Page 23773]]
considered and asked the Department to identify the offices responsible
for reviewing comments, the criteria used to evaluate comments, and how
the Department would demonstrate that input was weighed objectively and
in good faith.
Discussion: The Department reviewed all comments, including
comments that were submitted anonymously, that were received by the
deadline in response to the NPRM and conducted a multi-step review
process in which every comment was read, cataloged, and analyzed based
on the issues raised and the supporting rationale and evidence
provided. In addition, Department staff with relevant subject-matter
expertise, including staff from the Office of Postsecondary Education,
Office of the General Counsel, Office of the Under Secretary, Office of
the Chief Economist, and Federal Student Aid, conducted a comprehensive
review and analysis to identify significant comments submitted in
response to the NPRM. The Department's responses in this preamble
reflect careful consideration of those issues and concise general
statements explaining how stakeholder input informed the Department's
policy determinations.
Changes: None.
Comments: Several commenters commended the Department for engaging
in the negotiated rulemaking process and inviting public input for
these significant changes. One commenter believed our proposals
reflected a reasonable exercise of our authority under the negotiated
rulemaking process.
Discussion: We appreciate the commenters' support and likewise
acknowledges the work of the RISE Committee in reaching consensus on
regulatory text, which underlies this final rule.
Changes: None.
Comments: Some commenters expressed dissatisfaction with our
negotiated rulemaking process. Some of these commenters believed we
addressed too many complex issues at once. Other commenters believed
our timeline to make the system and operational changes by the
implementation date to be aggressive and unreasonable.
Discussion: We disagree with these commenters. Since the enactment
of the Working Families Tax Cuts Act, the Department has engaged with
the community in a transparent manner about the statutory changes to
the title IV, HEA programs. Although there were various issues under
the RISE Committee's purview, the Department believes the scope and
breadth of the rulemaking process was manageable. The Department often
negotiates many topics during the negotiated rulemaking process. In
many prior negotiations, the Department had a very wide array of topics
that were negotiated--often times, all unrelated to one another. By
contrast, the RISE Committee's negotiations focused exclusively on
student loans and related provisions. Other changes enacted by the
Working Families Tax Cuts Act, such as the establishment of Workforce
Pell Grants and a new accountability standard tied to low earning
outcomes, were considered by a separate negotiated rulemaking
Committee.
With respect to system and operational changes, as we state in the
Analysis of Public Comments and Changes section of this document, we
generally do not address changes or comments pertaining to operational
processes. However, we encourage affected parties to monitor our
websites for the latest updates.
Changes: None.
Comments: One commenter noted that we had an inaccessible docket on
<a href="http://regulations.gov">regulations.gov</a>.
Discussion: We disagree with the claim that the docket was
inaccessible on <a href="http://regulations.gov">regulations.gov</a>. The Department reviewed the docket and
determined the link that we published in the Federal Register (91 FR
4254) was to a summary that is required to be included in the docket.
Specifically, the Providing Accountability Through Transparency Act of
2023 requires agencies to publish the URL where a plain language
summary of the proposed rules may be found.
Throughout the public comment period, over 81,000 other commenters
were able to successfully submit comments. If the commenter believed
they were unable to submit a comment, we provided clear instructions in
the NPRM (91 FR 4254) that if a commenter cannot otherwise submit their
comments via Regulations.gov, to contact <a href="/cdn-cgi/l/email-protection#f3819694869f92879a9c9d809b969f8397968098b3948092dd949c85"><span class="__cf_email__" data-cfemail="295b4c4e5c45485d4046475a414c45594d4c5a42694e5a48074e465f">[email protected]</span></a> or
by phone at 1-866-498-2945.
Changes: None.
Comments: Some commenters advocated adding certain constituency
groups in the negotiated rulemaking process, including certain health
professionals. These commenters urged us to engage and consult with
experts from different backgrounds before implementing changes.
Discussion: On July 25, 2025, the Department published a notice in
the Federal Register (90 FR 31836) announcing its intention to
establish a negotiated rulemaking committee to prepare proposed
regulations for these issues. The notice set forth a schedule for the
committee meetings and requested nominations for individual negotiators
to serve on the RISE Committee. As we stated in that solicitation and
request for nominations, we select individual negotiators with
demonstrated experience in the relevant subjects under negotiation in
accordance with Section 492(b)(1) of the HEA. We established a
committee that allowed significantly affected parties to be represented
while at the same time keeping the Committee size manageable. As with
all other Committee representatives, each of these constituencies had
primary representatives and alternates. The Department believes it
identified the appropriate constituency groups involved in the title
IV, HEA program regulations being negotiated by the Committee. Further,
interested parties had several opportunities to be involved with the
rulemaking process, including by submitting written comments on the
proposed rule during the comment period we established prior to
negotiated rulemaking and during the public comment period on the
proposed rule. In fact, the number of written comments the Department
received, including those from the health professions community,
demonstrates the opportunity we provided for public participation in
the process. Additionally, the full negotiated rulemaking Committee
reached agreement on its protocols, including the composition of the
primary negotiators.
Changes: None.
Comments: Several commenters urged us to delay implementation of
these regulations. These commenters stressed the need for more time to
comply with the regulations or to allow for a transition to help make
certain that affected borrowers are not harmed by these regulations.
Discussion: As we stated in the NPRM (91 FR 4254), within the
Working Families Tax Cuts Act enacted on July 4, 2025, the vast
majority of the regulatory provisions have an effective date by July 1,
2026, and Congress expected the Secretary to act via rulemaking before
July 1, 2026, to enable the various provisions to go into effect in
accordance with statutory deadlines (91 FR 4254). Affected stakeholders
will have had nearly a year since enactment of the Working Families Tax
Cuts Act to assess the potential effects of the statutory provisions
and to begin planning any necessary policy and operational changes.
Changes: None.
[[Page 23774]]
Legal Authority/Department Authority
Comment: One commenter requested that the Department classify this
final rule as a major rule under the Congressional Review Act and allow
for full congressional review.
Discussion: The Office of Information and Regulatory Affairs has
already classified this final rule as a major rule, and as such, will
have at least a 60-day review period prior to the effective date. This
information is clearly reflected in the preamble in the Regulatory
Analyses section.
Changes: None.
Comments: Some commenters noted their belief that revoking or
changing the terms of a borrower's loan after they signed an agreement
to those terms is dishonest and wrong. These commenters point out that
when borrowers took out student loans, they signed an agreement with
the understanding that the terms and conditions would remain the same.
Discussion: We disagree with these commenters. We note that the
legally binding instrument upon origination of a Federal student loan
is the master promissory note (MPN). The MPN contains the legally
binding terms and conditions, including a section on the Borrower's
Rights and Responsibilities (BRR) stipulated under the HEA. By signing
the MPN, borrowers agree to the terms and conditions of the loans while
acknowledging that terms and conditions of those loans may be changed.
The MPN explicitly states that its terms and conditions ``are
determined by the HEA and other Federal laws and regulations'' and the
BRR further clarifies that subsequent amendments to the HEA and other
Federal laws could amend the terms of the MPN. Therefore, by signing
the MPN, and as explicitly stated in the BRR section of the MPN, the
borrower acknowledges amendments to the HEA may change the terms of the
MPN. The borrower also acknowledges that any amendment to the HEA that
changes the terms of the MPN will be applied to the borrower's loans in
accordance with the effective date of the amendment. Depending on the
effective date of the amendment, amendments to the HEA may modify or
remove a benefit that existed at the time that a borrower signed the
MPN.
This is not a new concept as Congress has changed the terms and
conditions of title IV loan programs numerous times, including for
borrowers who had already taken out loans. As we also explain in the
PSLF final rule (90 FR 48978), the MPN disclaims the notion that terms
and conditions of Federal student loans are fixed and can only be
changed through the legal process. The legal process here is through
the legislative changes enacted by Congress and signed by the
President. Here, the statutory changes to the HEA mandate that we
provide these revised terms and conditions.
Changes: None.
Comment: For purposes of the interim exception, one association
requested clarification regarding the treatment of existing borrowers
whose Direct Unsubsidized Loan MPNs expire after July 1, 2026. This
commenter inquired if a current borrower signs a new MPN on or after
July 1, 2026, if that borrower would remain subject to the prior terms
applicable at the time of their original borrowing or by the new terms.
This commenter maintained that clarification is necessary to make
certain that institutions can accurately and effectively counsel
borrowers.
Discussion: As stated above, the MPN includes information in the
BRR that clearly informs borrowers that any changes or amendments to
the HEA could change the terms of the MPN and the MPN would still be
valid. This includes MPNs that have previously been signed and are
fully executable. Specifically, we note that any amendment to the HEA
that changes the terms of the MPN would apply to the borrower's loans
in accordance with the effective date of the amendment and that
depending on the effective date of such amendment, amendments to the
HEA may modify or remove a benefit that existed at the time that the
borrower signed the MPN. We disagree with the commenter's
characterization that a borrower who signs a new MPN would either be
subject to the terms of their original MPN or the new MPN; both MPNs
would have that general condition that statutory changes could amend
the terms of their promissory notes, including ones that were signed
prior to the Working Families Tax Cuts Act. At the same time, some
borrowers who have loans that were originated before July 1, 2026, are
eligible for certain legacy repayment plans that loans originated after
such date are not eligible for, as explained below in this final rule.
We remind institutions that if the borrower's MPN is expiring, the
institution must obtain a valid MPN from the borrower before disbursing
a new Direct Loan to such borrower. This does not have an impact on the
eligibility for the interim exception; it is a requirement to receive
additional Federal student loans if desired.
Changes: None.
Comments: Some commenters argued that we should protect borrowers'
reliance interests, especially as they relate to PSLF. These commenters
believed that, at the time a borrower signed their MPN, the regulations
could not be materially altered. One commenter recommended that the
Department implement a grandfathering provision, whereby a borrower who
was on track to receive PSLF would retain the right to remain in an
income-contingent repayment plan until forgiveness or paid in full.
Discussion: We disagree with the commenters' concerns and believe
that reliance interests are not impacted here. Similar to the
Department's statements in the PSLF final rule (90 FR 48979) with
respect to reliance interests, a borrower would have to demonstrate
their detrimental reliance and would require proof that a promise or
representation was made and that promise or representation was relied
upon by the borrower asserting the estoppel in such a manner as to
change his position for the worse, and that the promise's reliance was
reasonable and should have been reasonably expected by the promisor.
See L. Mathematics & Tech., Inc. v. United States, 779 F.2d 675, 678
(Fed. Cir. 1985). Much like the PSLF final rule, the borrower would
fail to satisfy the required elements for a promissory estoppel claim
because they expressly acknowledged and agreed to the possibility of
changes to benefits that existed when they signed the MPN. The MPN
disclaims the idea that the terms and conditions of a Federal student
loan are unalterable, as we explain elsewhere in this document, meaning
that any reliance interest is not reasonable.
We also reject the commenter's recommendation that we grandfather a
borrower who was on track to PSLF so that they may retain the right to
remain in an income-contingent repayment plan until forgiveness or paid
in full as the statute is clear that these income-contingent repayment
plans must be sunset. Borrowers on track toward receiving PSLF will
have other PSLF-qualifying repayment plans available to them. Congress
was clear that income-contingent repayment plans sunset and will be no
longer available after July 1, 2028. The Department has no authority to
alter this sunset date.
Changes: None.
Loan Rehabilitation
Second Rehabilitation
Comments: A significant majority of commenters expressed strong
support for the provision allowing borrowers a second opportunity to
rehabilitate defaulted Federal student loans
[[Page 23775]]
beginning on or after July 1, 2027. Commenters characterized this as a
humane and positive step that acknowledges the reality of recurring
financial hardship. Commenters noted that financial situations can
change due to market factors beyond a borrower's control, such as
entering a workforce with low job opportunities. Supporters argued that
giving borrowers a second chance encourages repayment rather than long-
term default and helps bring consumers back into the economy. Several
commenters stated that this change strikes an appropriate balance
between personal accountability and the need for a meaningful path back
to repayment.
Discussion: The Department, effective July 1, 2027, increased the
number of times a borrower may rehabilitate a defaulted Federal student
loan made, insured, or guaranteed under title IV of the HEA from one
time to two times to reflect the changes made by the Working Families
Tax Cuts Act. The Department agrees that providing a second opportunity
for loan rehabilitation is a balanced and constructive borrower
protection. Allowing borrowers an additional opportunity to
rehabilitate a loan may assist borrowers in resolving default and
returning to repayment.
Changes: None.
Comments: Some commenters applauded the alignment of administrative
wage garnishment (AWG) suspensions with the two rehabilitation
opportunities authorized by the Working Families Tax Cuts Act, stating
that suspending garnishment during voluntary payment periods is vital
for a borrower's financial stability and their ability to successfully
complete the rehabilitation agreement.
Discussion: The Department agrees that expanding rehabilitation
opportunities can support borrowers seeking to resolve default. Section
82003(a)(1) of the Working Families Tax Cuts Act amended Sections
428F(a)(5) and 464(h)(1)(D) of the HEA, which permit borrowers to
rehabilitate a defaulted Federal student loan up to two times beginning
on or after July 1, 2027. The Department also agrees that suspending
AWG while a borrower makes voluntary rehabilitation payments supports
the borrower's transition back to good standing. Sections
685.211(f)(11) and (12) reflect that on or after July 1, 2027, a
borrower may obtain both the benefit of an AWG suspension, and the
rehabilitation process itself a maximum of two times per loan.
Changes: None.
Comments: Commenters requested regulatory language to clarify
whether restarting payments after a period of enrollment constitutes a
continuation of the first rehabilitation attempt or the start of a
second attempt. Specifically, these commenters proposed language
stating that a rehabilitation is considered a single attempt if a
borrower makes six payments, pauses for school, and then resumes to
complete the final three payments.
Discussion: Under existing regulations, a rehabilitation agreement
is defined by the successful completion of the required payment series
(nine payments within ten months). An attempt at rehabilitation that
does not result in the loan returning to good standing does not count
against the statutory limit on rehabilitations. A rehabilitation is
only counted toward the limit once it is successfully completed.
Therefore, if a borrower makes six payments, stops, and later enters
into a new agreement to make nine payments and successfully completes
the later agreement, they have still only used one of their permitted
rehabilitations. The Department believes the proposed regulations at
Sec. 685.211(f)(12), which distinguish between rehabilitations
completed before and after July 1, 2027, provide sufficient clarity on
the limits on successful rehabilitations without the need for the
additional language suggested by the commenters and the Department
declines to make these changes.
Changes: None.
Comments: One commenter recommended that the Department clarify how
the timing of a borrower signing a rehabilitation agreement should be
treated in implementing the second rehabilitation opportunity
established by the Working Families Tax Cuts Act. The commenter stated
that borrowers who have already been making voluntary payments on a
defaulted loan prior to July 1, 2027, should be able to receive the
benefit of the second rehabilitation opportunity if they sign the
rehabilitation agreement on or after that date, provided they have
otherwise satisfied the required payment criteria. The commenter also
suggested that borrowers who have already demonstrated good-faith
repayment through voluntary payments should not be required to repeat
the full series of rehabilitation payments solely because of when the
rehabilitation agreement was signed.
Discussion: The Department appreciates the commenters'
recommendation regarding the implementation of the second
rehabilitation opportunity authorized by the Working Families Tax Cut.
As discussed in the NPRM (91 FR 4259), the Department's loan
rehabilitation regulations implement the statutory changes that allow
borrowers to rehabilitate a defaulted loan up to two times beginning
July 1, 2027. The Department notes that loan rehabilitation is defined
by the successful completion of the required payment series under the
statute governing rehabilitation. The Department believes that the
proposed regulatory structure provides sufficient clarity regarding how
rehabilitation opportunities are counted and declines to make
additional regulatory changes regarding the timing of rehabilitation
agreements. As we also explain in the NPRM (91 FR 4288), we note that
the effective date for the second rehabilitation attempt cannot begin
until July 1, 2027, because the changes to the HEA regarding loan
rehabilitations take effect beginning on July 1, 2027 [emphasis added]
in accordance with the statutory deadlines contained in the Working
Families Tax Cuts Act. As such, the borrower cannot begin that second
rehabilitation until on or after the effective date.
Changes: None.
Comments: One commenter recommended that the Department require
borrowers who seek to rehabilitate a defaulted loan for a second time
to complete mandatory financial literacy counseling before entering
into a second rehabilitation agreement. The commenter stated that
counseling could help borrowers better understand the consequences of
repeated default and improve long-term repayment success. The commenter
suggested that such counseling could be provided by the Department or
an approved third-party partner and could emphasize the importance of
sustainable repayment strategies and the benefits of avoiding future
default.
Discussion: The Department appreciates the commenters'
recommendation regarding mandatory financial literacy counseling for
borrowers seeking a second loan rehabilitation. The Department agrees
that providing borrowers with information about repayment options and
the consequences of default can support successful repayment outcomes.
As discussed in the NPRM (91 FR 4289), the Department intends to
provide borrowers with improved guidance and information regarding
repayment options as they transition out of default and into repayment.
However, the Department declines to adopt a regulatory requirement
mandating counseling as a condition for a second rehabilitation. The
HEA establishes the
[[Page 23776]]
statutory framework governing loan rehabilitation, including the
requirement that borrowers make nine voluntary, reasonable, and
affordable payments within ten months to successfully rehabilitate a
defaulted loan. Requiring a borrower who seeks to rehabilitate a
defaulted loan a second time to complete mandatory financial literacy
counseling before entering into a second rehabilitation agreement is
inconsistent with the HEA and no statutory basis exists to impose such
a requirement for purposes of loan rehabilitation. The Department
believes that the existing statutory structure, combined with borrower
communications and guidance, is sufficient to support borrowers seeking
to rehabilitate their loans and declines to make the commenters'
proposed changes.
Changes: None.
Comments: One commenter supported the statutory provision
permitting borrowers to rehabilitate a defaulted loan a second time
beginning July 1, 2027, stating that the additional rehabilitation
opportunity could assist borrowers who previously rehabilitated their
loans but later experienced circumstances that resulted in another
default. However, the commenter expressed concern that the proposed
regulations do not describe how borrowers eligible for a second
rehabilitation opportunity will be identified or notified.
The commenter also requested that the Department include in
regulatory text the clarification provided in the preamble to the NPRM
that participation in the Fresh Start Initiative does not count as a
rehabilitation for purposes of the statutory limit on the number of
rehabilitations permitted. The commenter recommended that the
Department codify this clarification in the regulations and establish
outreach procedures to notify borrowers of their eligibility for a
second rehabilitation opportunity.
Discussion: The Department appreciates the commenter's support for
implementing the statutory provision allowing borrowers to rehabilitate
a loan a second time. As explained in the NPRM (91 FR 4259), the
Department is amending the loan rehabilitation regulatory revisions to
implement Section 82003 of the Working Families Tax Cut, which provides
that a borrower may rehabilitate a defaulted loan no more than two
times. The Department intends to implement this statutory change
consistently with existing loan rehabilitation processes administered
through Federal loan servicers and Department operational guidance.
Participation in the Fresh Start Initiative does not constitute a
loan rehabilitation for purposes of the statutory limit, as this
program purported to rely on a different legal authority. The
Department does not believe additional regulatory text changes are
necessary to implement this clarification and declines to make the
proposed changes.
Changes: None.
Streamlining Rehabilitation Process To Repayment
Comments: One commenter requested that the Department align the
definition of full rehabilitation to six months. The commenter noted
that under current regulations, a borrower can regain eligibility for
new Federal student loans after six on-time payments but must make nine
on-time payments to fully rehabilitate the defaulted loan. The
commenter argued that this discrepancy sets borrowers up for failure by
allowing them to take on new debt before their previous default is
fully resolved. Alternatively, commenters suggested that the Secretary
consider at least half-time enrollment at an eligible institution as an
approved ``hold'' on the rehabilitation process, allowing borrowers to
resume their remaining three payments within 45 days of their
enrollment end date without having to restart the process.
Discussion: The Department acknowledges the commenter's concern
regarding the different timelines for regaining title IV eligibility
versus completing rehabilitation. However, under Section 428F(a)(1)(A),
the nine-payment stipulation is a statutory requirement to successfully
rehabilitate a Federal student loan before a loan is returned to non-
defaulted status and the record of default is removed from a borrower's
credit history.
The Department declines to reduce the number of payments required
for full rehabilitation or to create a regulatory ``hold'' for
enrollment. Section 428F(a)(1) of the HEA specifically requires a
borrower to make nine payments within ten consecutive months to
successfully rehabilitate a defaulted loan. The Department does not
have the statutory authority to change this requirement through
regulation.
Changes: None.
Comments: Members of Congress and other commenters requested that
the Department allow payments made while a borrower is in default to
count toward timed forgiveness under IDR plans. Commenters stated that
for low-income borrowers, timed forgiveness is an important safeguard
that prevents borrowers from remaining in repayment indefinitely.
Commenters asserted that the default collections process may result in
borrowers paying more through wage garnishment or offsets than they
would otherwise pay under an IDR plan. Commenters noted that under
current regulations at Sec. 685.209, certain voluntary payments made
during loan rehabilitation may count as qualifying payments toward
forgiveness under the IBR plan. Commenters urged the Department to
maintain or expand this approach so that payments made while a borrower
is in default would count toward forgiveness across legacy IDR plans
and the Repayment Assistance Plan. Commenters stated that this policy
would help borrowers make meaningful progress toward forgiveness and
reduce confusion between repayment and default systems. Some commenters
also urged the Department to implement these provisions before
restarting involuntary collections such as through AWG and the Treasury
Offset Program (TOP).
Discussion: The Department appreciates commenters' perspectives
regarding the treatment of payments made while a borrower is in default
and their relationship to forgiveness under IDR plans. The Department
is amending Sec. 685.211 to implement the statutory changes made by
the Working Families Tax Cuts Act, including provisions establishing
the Repayment Assistance Plan, clarifying the repayment plans that may
be designated for borrowers in default, and revising the loan
rehabilitation framework. These amendments are intended to provide
borrowers and servicers with clearer rules governing the treatment of
payments and the repayment options available to borrowers who wish to
resolve their default. The Department's authority regarding how
payments may count toward forgiveness under IDR plans is governed by
the HEA and applicable statutory requirements that does not permit us
to count such payments toward forgiveness. Consistent with the proposed
regulations, the Department is focusing on clarifying the repayment
framework for borrowers in default and the transition from default into
repayment.
Changes: None.
Comments: One commenter recommended that the Department consider
using reliable third-party employment and income data sources to help
determine whether proposed rehabilitation payment amounts are
reasonable and affordable. The commenter stated that access to up-to-
date employment and salary information could help servicers
[[Page 23777]]
establish rehabilitation payment amounts that better reflect borrowers'
current financial circumstances and improve the sustainability of
rehabilitation agreements.
Discussion: The Department appreciates the commenters' suggestion
regarding the use of additional data sources to support the
determination of reasonable and affordable rehabilitation payment
amounts. Under the HEA, rehabilitation payments must be based on the
borrower's total financial circumstances. The Department currently
permits borrowers to provide income documentation or other financial
information to establish reasonable and affordable payment amounts. The
Department will continue to evaluate operational tools and data sources
that may assist in administering the rehabilitation process consistent
with statutory requirements and borrower privacy protections. However,
the Department declines to adopt specific regulatory provisions
governing the use of third-party employment data at this time.
Changes: None.
Comments: Commenters requested that the Department simplify the
loan rehabilitation process to eliminate administrative barriers for
borrowers. Commenters noted that the current rehabilitation process
relies heavily on manual and paper-based procedures, including
submitting documentation by mail or fax, which can result in a slow
process for borrowers seeking to resolve their default. Commenters
recommended several operational improvements, including allowing
borrowers to request and execute rehabilitation agreements online,
enabling electronic submission of income documentation, allowing
borrowers to track their progress toward completing rehabilitation
payments, and facilitating enrollment in income-driven repayment plans
following rehabilitation. Commenters also recommended that the
Department improve outreach to defaulted borrowers, streamline the
administrative steps required to enroll in rehabilitation, and explore
approaches to make post-rehabilitation payments more manageable,
including potential phase-in or transition periods for repayment
amounts.
Discussion: The Department appreciates commenters' recommendations
regarding improvements to increase the effectiveness of loan
rehabilitation as a path out of default. The Department is developing a
number of operational improvements that complement the regulations
implementing the rehabilitation improvements enacted in the Working
Families Tax Cuts Act.
We agree with commenters that operational improvements to make it
easier to enroll in income-driven repayment plans following
rehabilitation is important to make a seamless transition to repayment
for borrowers exiting default. Many borrowers who rehabilitate their
loans ultimately redefault if they do not enroll in an affordable
income-driven repayment plan. To that end, the final rule will enable
the Secretary to create a single application for rehabilitation
agreements for Direct Loans that also includes the option to sign up
for an eligible IDR plan. This single application will not be available
to Perkins Loan or FFEL borrowers. Borrowers who only wish to enroll in
loan rehabilitation will not be forced to also sign up for IDR;
however, the Department believes that giving borrowers the option to do
so will make it easier for borrowers to sign up. This all-in-one
application will allow borrowers to replace multiple applications with
one single transaction that would allow them to become enrolled in an
affordable payment plan after they successfully rehabilitate their
loan. Borrowers will also have the option to sign up for auto-debit for
both the rehabilitation agreement and the IDR plan, making it easy for
borrowers to make payments without the need for additional actions.
Under this single, all-in-one application, the Secretary would be
able to calculate the borrower's payment under the IDR plan using the
Federal tax information (FTI) (with the borrower's approval under HEA,
as amended by the FUTURE Act) \1\ to inform the borrower what their IDR
payment would be after rehabilitation. 26 U.S.C. 6103(l)(13); 20 U.S.C.
1098h. The borrower is not required to actually enroll in the IDR plan
for the Department to be able to use its authority (with borrower
approval) to access FTI and calculate eligible IDR payment amounts. 20
U.S.C. 1098h. This enables the borrower to compare different IDR plans
before selecting a plan or deciding not to enroll.
---------------------------------------------------------------------------
\1\ Public Law 116-91, 133 Stat. 1189.
---------------------------------------------------------------------------
If the borrower elects to see the monthly payment under and IDR
plan through this single application process, the Secretary now has the
borrower's monthly payment.
34 CFR 685.211 requires borrowers to make 9 monthly payments that
are reasonable and affordable to rehabilitate a loan. The regulations
include a provision that states that ``The Secretary initially
considers the borrower's reasonable and affordable payment amount to be
an amount equal to the payment required under the IBR plan.'' \2\ The
Department believes that this requirement is too narrow in that it only
applies to IBR and that monthly payment amounts under any eligible IDR
plan (not including SAVE/REPAYE) are reasonable and affordable. These
payment plans have been designed by the Department and Congress to be
affordable for borrowers. And furthermore, under the changes we are
making to this provision, borrowers can pick from among any eligible
plan, all of which are designed to be affordable.
---------------------------------------------------------------------------
\2\ The Department notes that this specific regulatory provision
has been vacated in Federal court because it was originally
promulgated as part of the SAVE Rule. See Missouri v. Department,
Case No. 4:24-cv-00520-JAR (E.D. Mo. March 10, 2026) (final order
vacating most aspects of the SAVE rule); Improving Income Driven
Repayment for the William D. Ford Federal Direct Loan Program and
the Federal Family Education Loan (FFEL) Program, 89 FR 2489 (Jan.
16, 2024). The Department's final rule here is not foreclosed by
that court order.
---------------------------------------------------------------------------
When a borrower elects to have their FTI pulled for the purposes of
determining an IDR monthly payment rate, the Secretary may use that
derivative monthly payment rate (with the borrower's approval) as the
monthly payment rate for the purposes of the rehabilitation agreement.
34 CFR 685.211(f)(1)(ii) currently calls on the borrower to submit
documentation to verify income, but in this limited circumstance, the
Department believes that additional documentation is generally
unnecessary. As such, the Department proposes to give the Secretary the
option not to require additional verification.
In some circumstances even when FTI is used to calculate the IDR
rate (which becomes the reasonable and affordable rate under a
rehabilitation), it may be appropriate for the Secretary to require
additional documentation. This may include when the borrower represents
that his or her income is higher or lower than what was reported on his
or her taxes, and when their family size has changed. In these
circumstances, the Secretary may have an interest in requesting
additional documentation from the borrower.
If the income information is unavailable or the Secretary does not
believe it is accurate, the borrower will be required to provide
alternative documentation of income. This approach is consistent with
and complements the regulations implementing the rehabilitation
improvements enacted in the Working Families Tax Cuts Act.
In addition, Parent PLUS borrowers are no longer eligible to enroll
in IDR
[[Page 23778]]
plans after the statutory changes made by the Working Families Tax Cuts
Act. For the purposes of the rehabilitation process, the Secretary may
confirm that the borrower is not eligible if they have Parent PLUS
loans. But the Secretary may follow the formulas in this final rule
under 34 CFR 685.211(f) under the IDR plans as if they were eligible in
order to determine the reasonable and affordable payment.
The Department's changes in these final regulations enable, but do
not require, the Secretary to provide a single application. The
Department intends to provide a single application to borrowers as soon
as practical but notes that several operational and technical changes
must be made to Department systems to make this possible. As such, the
Department will not have the single application available on July 1,
2026. However, as explained in the Paperwork Reduction Act section of
this preamble, the Department will make the draft application publicly
available and open a 60-day and 30-day public comment period before
being made available for use.
Lastly, the Department notes that borrowers who have a defaulted
student loan are ineligible for any IDR plan. As such, if a defaulted
borrower were to apply for an IDR plan under our current regulations,
the Secretary would be required to deny the application. However, we
propose changes to the regulations that allow the Secretary to hold the
IDR application, when it is submitted in combination with a
rehabilitation agreement application on the single application, until
the borrower has either: (1) completed the rehabilitation, or (2)
failed to complete the rehabilitation by not making the required nine
payments in a ten month period.
When a borrower successfully completes the rehabilitation, the
Secretary then approves the IDR plan and automatically enrolls the
borrower into the IDR plan. The single application will also enable the
borrower to sign up for auto-debit such that the Secretary may continue
the auto-debit after automatically enrolling the borrower into an IDR
plan. If the borrower fails to complete the rehabilitation, then the
Secretary denies the IDR application because the borrower is ineligible
for the plan.
As a result of these improvements to loan rehabilitation, we also
make two technical corrections to paragraphs (f)(2) and (3). In (f)(2),
we replace ``account'' with ``loans'' and in (f)(3), we replace
``objects to'' to ``rejects''.
Changes: We amend Sec. 685.211(f)(1)(ii) to read as follows:
(ii)(A) The Secretary may calculate the payment amount based on
information provided orally (or through other means) by the borrower or
the borrower's representative and provide the borrower with a
rehabilitation agreement using that amount. (B) The Secretary may
provide a single application for the purpose of enabling a borrower to
apply for loan rehabilitation and income driven repayment
simultaneously, and may, with the borrower's approval, calculate the
payment amount for any income driven repayment plan that the borrower
would otherwise be eligible for (after successful rehabilitation of the
defaulted loan) to inform the borrower of the projected monthly
repayment amount under such plan after the loans are rehabilitated. The
Secretary may use the calculated payment required under any eligible
income driven repayment plan for the purpose of determining the
reasonable and affordable payment amount under this paragraph (f)(1),
with the borrower's approval. Nothing in this section prohibits the
Secretary from accepting an application from a borrower for an IDR plan
who is currently enrolled in a rehabilitation agreement but has not yet
completed such agreement by making the requisite payments and holding
such application until the borrower has completed the rehabilitation.
(C) The Secretary requires the borrower to provide documentation to
confirm the borrower's AGI and family size, except that the Secretary
may, in his or her discretion, consider such additional documentation
unnecessary if the borrower approves having the payment amount
calculated by the Secretary for an eligible income driven repayment
plan as the borrower's reasonable and affordable payment. If the
borrower's AGI or family size is not available, or if the Secretary
believes that the borrower's reported AGI or family size may be
inaccurate, the borrower must provide other documentation to verify
income or family size. If the borrower fails to provide acceptable
documentation to verify family size, the Secretary assumes a family
size of one. If the borrower does not provide the Secretary with any
income documentation requested by the Secretary to calculate or confirm
the reasonable and affordable payment amount within a reasonable time
deadline set by the Secretary, the rehabilitation agreement provided is
null and void.
We also make two technical corrections to Sec. Sec. 685.211(f)(2)
and (3).
Comments: Commenters generally supported the establishment of clear
minimum payment amounts for rehabilitation. However, some sought
clarification on the difference between FFEL and Direct Loan
requirements.
Discussion: To reflect changes made by the Working Families Tax
Cuts Act that amended Section 428F(a)(1)(B) of the HEA, the Department
is establishing a $10 minimum monthly payment for the rehabilitation of
a defaulted Direct Loan beginning July 1, 2027. Prior to that date, the
minimum payment is $5. The Department notes that, while the Direct Loan
minimum monthly rehabilitation payment will increase to $10, the
minimum monthly rehabilitation payment for the FFEL Program remains at
$5 under Sec. 682.405. This lack of change is because the statute did
not amend the minimum monthly payment for rehabilitation of a defaulted
FFEL loan. Section 428F(a)(1)(B) of the HEA was amended only with
respect to a borrower who has one or more loans made under part D
[i.e.: Direct Loans] on or after July 1, 2027, that are being
rehabilitated, establishing the total monthly payment for the borrower
with all such loans shall not be less than $10.
When the Secretary determines the amount of a borrower's reasonable
and affordable payment for loan rehabilitation, we initially proposed
that the loan rehabilitation payment amount to be an amount equal to
the minimum payment required under the IBR plan, except if this amount
was less than $5 (or $10 beginning on or after July 1, 2027), the
monthly payment was $5 (or $10 beginning on or after July 1, 2027).
After further review, if the borrower avails themself of the
rehabilitation agreement under Sec. 685.211(f)(1)(ii), the loan
rehabilitation payment amount will be the minimum amount under the IDR
plan proactively selected by the borrower in their application. We
note, however, that if a borrower's IDR monthly payment is $0, the
borrower's loan rehabilitation payment amount will be $10 in accordance
with the aforementioned.
Section 494(b) of the HEA and 26 U.S.C. 6103(l)(13) limits the
Secretary's authority to obtain FTI from the IRS only for purposes of
administering the FAFSA[supreg], enrollment in an IDR plan, and total
and permanent disability discharge determinations. However, in response
to the commenters' desire to streamline the rehabilitation process as
well as an on-ramp to affordable repayment, we believe we can
proactively obtain the borrower's FTI for enrollment in an IDR plan
with their approval. As such, we are using the IDR rate, derived from
the borrower's FTI, to determine the reasonable and affordable rate for
loan rehabilitation.
[[Page 23779]]
The borrower is not required to actually enroll in the IDR plan for
the Department to be able to use its authority (with borrower approval)
to access FTI and calculate eligible IDR payment amounts. 20 U.S.C.
1098h. This enables the borrower to compare different IDR plans before
selecting a plan or deciding not to enroll.
If the borrower elects to see the repayment rates through this
single application process, the Secretary now has the borrower's
monthly repayment rate.
The Department may not require borrowers to check their IDR payment
rates using FTI, and even if a borrower elects to do so, the Department
cannot require the borrower to use the derivative monthly payment rate
as the reasonable and affordable rate. However, the Department believes
that we may provide this option to borrowers to reduce the need for
additional documentation of income and family size, potentially
reducing the process that currently takes a few weeks down to a matter
of minutes.
Section 494(b) of the HEA limits the Secretary's authority to
obtain FTI from the IRS only for purposes of administering the
FAFSA[supreg], enrollment in an IDR plan, and total and permanent
disability discharge determinations. However, in response to the
commenters' desire to streamline the rehabilitation process as well as
into better facilitate on-ramp to repayment, we believe we can
proactively obtain the borrower's FTI for enrollment in an IDR plan.
Since we would have the borrower's income at that point, with the
borrower's approval, we could use that income information for purposes
of calculating a reasonable and affordable payment for loan
rehabilitation which will facilitate support a more seamless process
for struggling distressed borrowers. This reasonable and affordable
payment will align with the minimums in Sec. 685.211(f)(1)(i).
Changes: We amend Sec. 685.211(f)(1)(i) to read as follows: (i)
Payment Amount. (A) Before July 1, 2027, the Secretary initially
considers the borrower's reasonable and affordable payment amount to be
an amount equal to the payment required under any eligible income-
driven repayment plan, except if this amount is less than $5, the
borrower's monthly payment is $5. (B) Beginning on and after July 1,
2027, the Secretary initially considers the borrower's reasonable and
affordable payment amount to be an amount equal to the payment required
under any eligible income-driven repayment plan, except that if this
amount is less than $10, the borrower's monthly payment is $10.
Comments: Non-Federal negotiators and other commenters urged the
Department to automatically enroll borrowers in an income-driven
repayment plan, such as the Repayment Assistance Plan, immediately upon
completion of rehabilitation. Commenters expressed concern that
borrowers might successfully rehabilitate but then default again
because they failed to navigate the process required to select an
affordable repayment plan.
Discussion: The Department shares the goal of ensuring borrowers
enter into affordable plans post-rehabilitation and continue to
successfully repay the rehabilitated loans. However, under the HEA, the
Secretary does not have the unilateral authority to select a repayment
plan for a borrower who is no longer in default. As discussed in the
NPRM (91 FR 4288), borrowers who rehabilitate a defaulted loan may
select a repayment plan, including the Repayment Assistance Plan, and
must affirmatively authorize the Department to use their FTI to
determine their monthly payment amounts for plans that are based on
income. To accomplish this, the Department is designing improved
processes for rehabilitation so that borrowers can choose their
repayment plans earlier and can authorize the use of FTI to enroll in
the new Repayment Assistance Plan upon rehabilitation of the defaulted
loans. Additionally, the Department may not move borrowers into
different repayment plans without their consent.
We believe that regulatory text is needed to clarify the borrower's
enrollment in an IDR plan after rehabilitation. Because we share
commenters' concern to make post-rehabilitation enrollment in an IDR
plan as seamless as possible, we will add a new paragraph (f)(14) that
states a borrower who has a defaulted Direct Loan that is rehabilitated
on or after July 1, 2026, may be transferred to the income-driven
repayment plan by the Secretary if that borrower applied for such plan
on a single application.
Changes: We add Sec. 685.211(f)(14) to read as follows: A borrower
who has a defaulted Direct Loan that is rehabilitated on or after July
1, 2026, may be transferred to the income-driven repayment plan by the
Secretary if that borrower applied for such plan on a single
application.
Comments: Commenters supported the Department's proposal to improve
the loan rehabilitation process by ensuring borrowers are informed of
repayment options and the ability to authorize the use of FTI to enroll
in affordable repayment plans. Commenters encouraged the Department to
amend Sec. 685.211(f) to allow borrowers to consent to sharing their
FTI at the time they enter into a rehabilitation agreement so that they
may be automatically enrolled in the income-driven repayment plan with
the lowest payment, unless they decline such enrollment. Commenters
also recommended improving the borrower experience during
rehabilitation by allowing borrowers to make rehabilitation payments
online, enroll in automatic payments, and track their progress toward
completing rehabilitation. In addition, commenters recommended that the
Department cease involuntary collections activities, including AWG and
TOP collections, once a borrower executes a rehabilitation agreement
rather than waiting until several rehabilitation payments have been
made.
Discussion: The Department appreciates commenters' support for
improving the loan rehabilitation process and agrees that borrowers who
successfully rehabilitate their loans should have access to clear
information about their repayment options and straightforward pathways
to affordable repayment. As discussed in the NPRM (91 FR 4288), the
Department is redesigning the rehabilitation process so that borrowers
are informed of their repayment options, may authorize the use of FTI
to enroll in the Repayment Assistance Plan, to facilitate borrowers'
transition from default into sustainable repayment once their loans are
rehabilitated. As stated earlier, we share commenters' concern to make
post-rehabilitation enrollment in an IDR plan as seamless as possible
and will add a new paragraph (f)(14) that states a borrower who has a
defaulted Direct Loan that is rehabilitated on or after July 1, 2026,
may be transferred to the income-driven repayment plan by the Secretary
if that borrower applied for such plan on a single application.
With respect to involuntary collections during rehabilitation, the
Department's regulations reflect the statutory framework governing loan
rehabilitation and the suspension of AWG under Sec. 685.211, and
therefore, we decline to make the commenter's proposed changes.
Changes: We add Sec. 685.211(f)(14) to read as follows: A borrower
who has a defaulted Direct Loan that is rehabilitated on or after July
1, 2026, may be transferred to the income-driven repayment plan by the
Secretary if that
[[Page 23780]]
borrower applied for such plan on a single application.
Comments: Commenters suggested strengthening the Repayment
Assistance Plan by preserving automatic enrollment into an income-
driven repayment plan after a borrower completes loan rehabilitation.
Commenters stated that this change, and others, would help make certain
that borrowers transitioning out of default remain in an affordable
repayment plan and reduce the likelihood of re-default. Commenters
emphasized that borrowers who successfully complete rehabilitation
should be able to seamlessly transition into the Repayment Assistance
Plan or another IDR plan so that they can maintain manageable monthly
payments.
Discussion: The Department appreciates commenters' recommendations
regarding the Repayment Assistance Plan and the transition of borrowers
from default into repayment. The Department is revising Sec. 685.211
to implement the statutory changes made by the Working Families Tax
Cuts Act, including establishing the Repayment Assistance Plan,
clarifying which repayment plans which may be used for certain
defaulted Direct Loans, and expanding the number of times a borrower
may rehabilitate a defaulted loan. The Department recognizes the
importance of ensuring that borrowers who exit default have access to
affordable repayment options and intends to provide opportunities for
borrowers to select a repayment plan earlier during the rehabilitation
process, consistent with the statutory framework governing the use of
FTI for IDR plans.
As stated earlier, we are compelled that facilitating enrollment in
income-driven repayment plans following rehabilitation is important to
make a seamless transition to repayment after exiting default. We
explained that we will create a single application for purposes of
enrollment in an IDR plan as well as a rehabilitation agreement. To
implement this approach, we will amend Sec. 685.211(f)(1)(ii). We
explained that we will create a single, all-in-one application for
purposes of enrollment in an IDR plan as well as a rehabilitation
agreement and that, under this single application, the Secretary would
be able to calculate the borrower's payment under the IDR plan using
the FTI (with the borrower's approval under the FUTURE Act) to inform
the borrower what their IDR payment would be after rehabilitation.
Because the borrower would have already disclosed their FTI to the
Secretary, we then can use the income information (with the borrower's
approval) to calculate a reasonable and affordable payment for
rehabilitation and additional documentation would not be necessary. To
codify this approach that is consistent with and complements the
regulations implementing the rehabilitation improvements enacted in the
Working Families Tax Cuts Act, we will amend Sec. 685.211(f)(1)(ii).
Changes: We amend Sec. 685.211(f)(1)(ii) to read as follows:
(ii)(A) The Secretary may calculate the payment amount based on
information provided orally (or through other means) by the borrower or
the borrower's representative and provide the borrower with a
rehabilitation agreement using that amount. (B) The Secretary may
provide a single application for the purpose of enabling a borrower to
apply for loan rehabilitation and income driven repayment
simultaneously, and may, with the borrower's approval, calculate the
payment amount for any income driven repayment plan that the borrower
would otherwise be eligible for (after successful rehabilitation of the
defaulted loan) to inform the borrower of the projected monthly
repayment amount under such plan after the loans are rehabilitated. The
Secretary may use the calculated payment required under any eligible
income driven repayment plan for the purpose of determining the
reasonable and affordable payment amount under this paragraph (f)(1),
with the borrower's approval. Nothing in this section prohibits the
Secretary from accepting an application from a borrower for an IDR plan
who is currently enrolled in a rehabilitation agreement but has not yet
completed such agreement by making the requisite payments. (C) The
Secretary requires the borrower to provide documentation to confirm the
borrower's AGI and family size, except that the Secretary may, in his
or her discretion, consider such additional documentation unnecessary
if the borrower approves to having the payment amount calculated by the
Secretary for an eligible income driven repayment plan as the
borrower's reasonable and affordable payment. If the borrower's AGI or
family size is not available, or if the Secretary believes that the
borrower's reported AGI or family size may be inaccurate, the borrower
must provide other documentation to verify income or family size. If
the borrower fails to provide acceptable documentation to verify family
size, the Secretary assumes a family size of one. If the borrower does
not provide the Secretary with any income documentation requested by
the Secretary to calculate or confirm the reasonable and affordable
payment amount within a reasonable time deadline set by the Secretary,
the rehabilitation agreement provided is null and void.
Comments: One commenter recommended that the Department amend Sec.
685.211(f)(13) to allow borrowers who rehabilitate a Direct Loan and
returns to a repayment status on that rehabilitated loan on or after
July 1, 2024, and who have one or more Direct Loans made on or after
July 1, 2026, to be transferred to the Repayment Assistance Plan rather
than the REPAYE plan. The commenter stated that such an amendment would
align the regulation with the repayment options that will be available
to borrowers under the amendments made to the HEA by the Working
Families Tax Cuts Act.
Discussion: The Department shares the commenter's goal of ensuring
that borrowers who exit default are placed in the most appropriate
repayment plan available to them under the HEA and the Working Families
Tax Cuts Act. As noted in the discussion regarding automatic
enrollment, the Department intends to design rehabilitation processes
that inform borrowers of their repayment options, including the
Repayment Assistance Plan, and allow them to authorize the use of FTI
to determine their payment amounts for plans based on income.
However, under the HEA, the Secretary does not have the unilateral
authority to select a specific repayment plan for a borrower who is no
longer in default without the borrower's affirmative selection and
authorization. While the Repayment Assistance Plan will be the primary
income-driven option for new borrowers under the Working Families Tax
Cuts Act, the administrative transition into that plan is an
operational matter. These improvements, including the use of online
self-service tools to facilitate enrollment, will be addressed through
implementation guidance and system updates, and, as such, we decline to
make commenters' proposed changes to paragraph (f)(13).
However, we believe that regulatory text is needed to clarify the
borrower's enrollment in an IDR plan after rehabilitation. Because we
share commenters' concern to make post-rehabilitation enrollment in an
IDR plan as seamless as possible, we will add a new paragraph (f)(14)
that states a borrower who has a defaulted Direct Loan that is
rehabilitated on or after July 1, 2026, may be transferred to the
income-driven repayment plan by the Secretary if that borrower applied
for such plan on a single application.
[[Page 23781]]
Changes: We add Sec. 685.211(f)(14) to read as follows: A borrower
who has a defaulted Direct Loan that is rehabilitated on or after July
1, 2026, may be transferred to the income-driven repayment plan by the
Secretary if that borrower applied for such plan on a single
application.
Definitions
Graduate Student (Definition and Boundary With ``Professional
Student'')
Comments: Many commenters asked the Department to clarify how the
definition of graduate student differs from the definition of
professional student. Some commenters argued that the Department was
creating a hierarchy among graduate pathways, while others requested
greater clarity about how programs would be identified for placement in
the correct category.
Commenters also raised implementation and classification concerns
regarding how programs will be identified for purposes of placing
borrowers into the correct category, including concerns about
inconsistent institutional labeling and program coding. Some commenters
asked whether doctoral programs could be swept into the professional
category unintentionally, while others urged the Department to treat
certain graduate programs as professional even if they were not
originally included in the definition.
Discussion: The Department is retaining the proposed definition. As
explained in the NPRM (91 FR 4260), Sec. 685.102 defines a graduate
student as a student enrolled in a program of study above the
baccalaureate level that awards a graduate credential other than a
professional degree upon completion. Professional student is a narrower
classification tied directly to the incorporated professional-degree
framework enacted by Congress in its amendments to Section 455(a)(4) of
the HEA, rather than institutional labeling or the broader fact that
many graduate programs lead to professional employment. These
definitions serve a loan-administration function: they identify
borrower categories for solely for the purposes of obtaining the higher
loan limits for Direct Loan purposes. They do not express a value
judgment about the importance of any occupation or field.
The Department further clarifies that, unless a borrower is
enrolled in a program that satisfies the incorporated professional-
degree framework, a borrower in graduate-level enrollment is treated as
a graduate student for purposes of the Direct Loan regulations. This
approach provides a clearer and more uniform boundary than commenter-
suggested approaches that hinge on program title, generalized licensure
concepts, or case-by-case characterizations of professional status.
Changes: None.
Program Length (Definition and Role in Applying Transition Concepts)
Comments: Commenters asked the Department to clarify whether the
definition of program length means the institution's published minimum
full-time length for a program or a borrower-specific estimate based on
remaining terms, credits, or anticipated graduation date. Some
commenters argued that a published minimum-time standard is too rigid
for students in sequenced curricula, students on academic probation who
remain full-time, or students whose progression is delayed by course
ordering or other ordinary academic variation.
Commenters also raised process questions about uniformity across
institutions, particularly where similarly titled programs have
different pacing models, and asked whether program length is intended
to reflect the minimum published time for full-time enrollment or the
typical time a student actually takes to complete their degree,
including for part-time attendance or stop-outs.
Discussion: The Department clarifies that, consistent with Section
455(a)(8)(C) of the HEA, program length in 34 CFR 685.102(b) means the
minimum amount of time in weeks, months, or years specified in an
institution's catalog, marketing materials, or other official
publications for a full-time student to complete a specific program of
study. Program length is therefore a program-level attribute, not a
borrower-specific projection based on an anticipated graduation date,
remaining course credits, sequencing delays, or other individualized
circumstances. This approach provides a clear, consistent reference
point that can be applied across institutions and programs when the
regulations rely on program length for related concepts.
The Department further notes that, where a borrower enrolls part-
time, pauses enrollment, or otherwise deviates from the standard full-
time progression, the borrower's actual time to completion may differ
from the program's standard length; however, the Department does not
interpret program length to change borrower-by-borrower. Rather,
program length remains a program-level feature used for applying the
related definitions and transition concepts discussed elsewhere in the
rule. The NPRM (91 FR 4267) further explains that the Department
included the term ``full-time'' because that wording appears in the
statutory definition. The Department believes the statute refers to the
institution's published program structure (see Section 455(a)(8)(C) of
the HEA), consistent with how program length is used in other title IV
contexts.
The Department believes that an objective, published measure is
necessary because the transition provisions use program length as an
input for related definitions, including expected time to credential,
and because a borrower-specific anticipated-graduation-date approach
would reduce consistency in administration across institutions.
Changes: None.
Expected Time to Credential (Definition and Application)
Comments: Commenters asked how expected time to credential would be
calculated, who would apply the calculation, and how the concept would
operate in the transition exception for continuing borrowers.
Commenters specifically raised questions about whether the calculation
depends on academic-year definitions, course credits completed, class
standing, or other individualized circumstances, and whether borrowers
must be able to finish within three academic years to remain within the
transition framework.
Discussion: The Department is retaining the proposed definition of
expected time to credential as, from July 1, 2026, the lesser of three
academic years, as defined in 34 CFR 668.3, or the period determined by
subtracting from the program length the portion of the program the
borrower has already completed. Expected time to credential was
included in the statute to provide a transition period for currently
enrolled students to maintain eligibility for the current loan limits
during the length of their program. The Department therefore declines
to replace this program-based calculation with anticipated graduation
date or other individualized approaches.
The NPRM (91 FR 4261) explains that the Department included the
July 1, 2026, date and the cross-reference to academic year to provide
clarity and consistency with other elements of the regulations and
existing policy.
Changes: None.
Professional Student
Professional Student and Professional Degree
The Department received a substantial number of comments concerning
both
[[Page 23782]]
the overall framework for identifying a professional student for title
IV loan limit purposes, and the application of that framework to
professions, degree pathways, and instructional programs. The
Department addresses those comments in two parts. First, we address
cross-cutting comments concerning the statutory and regulatory
framework, the meaning of the incorporated professional degree
concepts, and commenters' broad arguments regarding licensure required
to enter practice, workforce need, borrowing costs, and program
identification.
Second, the Department addresses comments concerning specific
professions and degree pathways, applying the same governing framework
of the definition of professional student to the particular fields and
programs discussed by commenters in order of the enumerated list of
professional degrees as explained in the NPRM (91 FR 4260-4266), and
then by other degrees not specifically mentioned in the NPRM. This
organization promotes clarity, reduces unnecessary repetition, and
explains the basis for the Department's responses in a consistent and
uniform manner.
At the onset, the Department notes that our classification of
particular professions and degree pathways into either ``graduate'' or
``professional'' does not represent a normative judgment regarding
whether we think the underlying career is worthy. The term
``professional student'' is used in the new amendments to the Higher
Education Act to classify degrees based upon particular characteristics
only for the purposes of Direct Loan eligibility.
Conversely, the word ``professional'' is used in common parlance to
describe how individuals approach their work or the nature of their
employment. Throughout our economy, there are many workers who are
appropriately described as ``professional'' in that they have
significant skills and carry out their duties in a competent manner.
This rule does not pass judgment regarding the relative worth of those
careers, nor does it claim that the work that many Americans are
engaged in is not professional.
The Higher Education Act uses the term ``professional student'' in
an entirely different context and defines that term in a manner that is
quite different than the common usage of the word ``professional.'' In
this rule, we interpret the law as written and do not claim that
degrees that do not meet the definition of ``professional student'' are
of lesser worth.
Professional Student Definition--General Support, Opposition, and
Statutory/Regulatory Framework General Support
Comments: Many commenters expressed support for the Department's
definition of professional degree. These commenters emphasized
Congress's intent to curb graduate borrowing and supported the
Department's decision to closely follow the definition contained in the
Working Families Tax Cuts Act. These commenters also supported the
Department's adherence to the consensus definition reached by the
negotiated rulemaking RISE Committee.
Some commenters also supported the Department's use of a bounded
and objective framework for implementing the statutory distinction
between graduate students and professional students. These commenters
generally agreed that a clear rule would be easier for institutions and
borrowers to administer, would reduce ad hoc expansion pressure, and
would better align borrowing with the statutory structure. A smaller
set of commenters also supported common sense loan caps and bounded
classification as a form of consumer protection and fiscal stewardship.
For example, one commenter stated that no one should borrow more than
$100,000 for a non-professional master's degree and stated that
stronger guardrails would better protect future borrowers from
devastating financial decisions. Commenters noted that programs that do
not meet the definition of professional degree have an opportunity to
better align costs with market need.
Some commenters supported the inclusion of doctoral-level clinical
psychology within the professional student framework. These commenters
agreed that doctoral-level clinical psychology fits within the
incorporated professional degree definition because it signifies
completion of the academic requirements for beginning practice in a
distinct profession, requires a level of professional skill beyond that
normally required for a bachelor's degree, and generally requires
licensure. Commenters also supported the Department's conclusion that
inclusion of doctoral-level clinical psychology is consistent with the
structure of the incorporated definition and the context supplied by
the illustrative examples in the NPRM (91 FR 4262-63).
Discussion: As explained in the NPRM (91 FR 4261-63), the final
rule implements Congress's decision to tie the professional student
classification to the existing definition of professional degree in 34
CFR 668.2 for title IV loan-limit purposes. The Department is adopting
that approach in the final rule to provide a clear, nationally uniform
framework for administering the statutory loan-limit provisions. The
Department agrees with commenters who supported that approach and who
stated that it will improve clarity and consistency in the Federal
student loan system.
The Department also agrees with commenters who supported inclusion
of doctoral-level clinical psychology. As explained in the NPRM (91 FR
4263-64), doctoral-level clinical psychology satisfies each element of
the incorporated framework. First, obtaining a doctorate in clinical
psychology because it signifies completion of the academic requirements
for beginning practice in a distinct profession, as a doctorate in
clinical psychology is explicitly required for licensure (and therefore
to practice) as a psychologist in every State.\3\ Second, a doctorate
in clinical psychology requires a level of professional skill
significantly in excess of that normally required for a bachelor's
degree, as profession must require skill(s) that students who only have
a bachelor's degree (or training below a bachelor's degree level) would
not have. Finally, in every State, a license is required to practice in
the field of clinical psychology.\4\
---------------------------------------------------------------------------
\3\ Am. Psychol. Ass'n. Serv, Inc., State licensure and
certification information for psychologists, <a href="https://www.apaservices.org/practice/ce/State/State-info">https://www.apaservices.org/practice/ce/State/State-info</a>.
\4\ See supra n.1.
---------------------------------------------------------------------------
In addition to satisfying the operative requirements, a doctorate
in clinical psychology also shares common characteristics with the
other degrees included in the illustrative list of professional degrees
in the definition. Like nearly all of the other degrees in the
illustrative list, a Doctor of Psychology (Psy. D.) requires a minimum
of three full-time academic years of graduate study (or the equivalent
thereof) plus an internship to graduate from any APA-accredited
program.\5\ Like nearly all of the other degrees included in the
illustrative list, this degree is at the doctoral level. Finally, like
all persons holding those degrees included in the illustrative list
where licensure is explicitly required to practice in their field,
doctoral-level clinical psychology graduates are not required to work
under the supervision of another professional in a different profession
(so other residencies or internships) as a condition of licensure.
[[Page 23783]]
Therefore, the Department concludes that treating doctoral-level
clinical psychology as a professional degree under this framework is
consistent with the structure of the incorporated definition and the
context supplied by the illustrative examples.
---------------------------------------------------------------------------
\5\ See Am. Psychol. Ass'n., Standards of Accreditation for
Health Service Psychology, at 7 (rev. approved Feb. 2026), <a href="https://www.apa.org/ed/accreditation/standards-of-accreditation.pdf">https://www.apa.org/ed/accreditation/standards-of-accreditation.pdf</a>.
---------------------------------------------------------------------------
Changes: None.
General Opposition
Comments: Many commenters opposed the Department's approach to
defining professional student, as they believed it to be too narrow.
These commenters argued that the incorporated professional degree
examples are underinclusive, outdated, or tied to historical models of
professional education that no longer reflect modern practice. Some
urged the Department to treat the enumerated examples as illustrative
rather than bounded. Others argued that the Department was adding
limitations not found in the statutory or regulatory text, including by
requiring programs to resemble the enumerated examples in 34 CFR 668.2,
to fit older historical models of professional education, or to satisfy
a narrower set of licensure and practice conditions than commenters
believed the incorporated definition requires. Many commenters
specifically argued that physical therapy, occupational therapy, social
work, physician assistant, and various graduate-level nursing programs
satisfy the ``three-part test'' in 34 CFR 668.2: (1) the degree
signifies both completion of the academic requirements for beginning
practice in a given profession, (2) requires a level of professional
skill beyond that is normally required for a bachelor's degree, and (3)
professional licensure is generally required. They believed that in
excluding these programs, that the Department is improperly narrowing
Congress's adopted language. Other commenters asserted that additional
graduate programs should qualify because they believed those programs
satisfy both the operative elements of 34 CFR 668.2 (as codified by the
Act) and closely resemble the listed professional degree examples
reflected in the incorporated framework.
Similarly, at least one commenter stated that the Doctor of Public
Health (DrPH) functions as the terminal professional practice doctorate
in public health and therefore, should be treated as a professional
degree. These comments also urged the Department to move away from a
bounded cross-reference and toward a broader, more contemporary
standard linked to licensure, professional responsibility, and practice
expectations.
Some commenters also stated that the Department's definition of
professional student does not account for graduate pathways that may
involve specialized professional preparation, occupational
responsibility, formal accreditation, or strong labor-market
recognition.
Discussion: The Department does not believe that our approach to
defining professional student is too narrow nor do we believe it should
be expanded to include more degree programs. Congress defined
professional student in Section 455(a)(4)(C)(ii) of the HEA by cross
referencing the Department's current definition of professional degree
in 34 CFR 668.2 (effectively codifying that regulatory definition), and
the Department is implementing that framework in Sec. 685.102 as a
loan limit classification.
The Department also does not agree with commenters who argued that
physician assistant, physical therapy, occupational therapy, social
work, graduate-level nursing programs, Doctor of Public Health
programs, and similar graduate programs should qualify because they
allegedly satisfy the operative elements of the incorporated
definition. The Department is not interpreting the cross-referenced
definition as a free-standing test under which any graduate program
involving advanced study, clinical preparation, licensure-related
requirements, accreditation, or occupational responsibility must be
treated as a professional degree program. Nor is the Department
treating the enumerated professional degree examples in 34 CFR 668.2 as
indicative of an open-ended category to be added to at the Department's
discretion. Rather, the Department is applying the incorporated
definition as a bounded and uniform classification informed by the
listed examples and the same general class of programs reflected in the
enumerated examples. Applying that interpretation, the Department's
conclusion is that the additional programs identified by the commenters
do not qualify.
As discussed in the NPRM (91 FR 4261-65) and in the program-
specific discussions below, the Department reviewed these proposals and
concluded that the cited additional programs do not fall within the
incorporated professional degree framework for title IV loan limit
purposes.
Changes: None.
Definition of Professional Student Provided by Congress
Comments: Several commenters disagreed with our definition of
professional student and that we should modify our definition of the
list of degrees that are considered professional degrees. These
commenters stated that we should use the definition provided by
Congress and that the statute did not limit the list of professional
degrees based on Classification of Instructional Programs code (CIP
codes), or other factors, as we stated in the NPRM. These commenters
assert adding other criteria to the definition is beyond the scope of
our authority.
Discussion: The Department does not believe further clarifying this
definition in regulation is outside of our authority and believe we
based our definition on the statute. As we explain in the NPRM (91 FR
4261), we added a new definition of professional student in Sec.
685.102 for the purpose of distinguishing between graduate students and
professional students solely for the new loan limits. This definition
is consistent with Section 455(a)(4)(C)(ii) of the HEA, the statutory
definition of professional student. Specifically, in paragraph (2)(i)
of our definition of professional student in Sec. 685.102, we added a
list of enumerated professional degrees that is consistent with the
statute.
The statute creates an operative definition with elements that must
be applied to all degree programs. In addition, the illustrative list
of degrees in the statute provides context and limiting principles that
are common across all, or substantially all, of the illustrative
programs listed in the definition. Degree programs that meet the
operative elements and satisfy the contextual principles are
professional degrees; all other programs at the graduate level do not.
The statute is not fixed in the sense that new degree programs could,
at some point in the future, be professional degrees even if the
program-type was not in existence when Congress passed the Act. As the
economy evolves and new degrees and careers are created, it is possible
that those degree pathways could meet the definition of professional
student. Therefore, our definition of professional student in Sec.
685.102 is consistent with the HEA, and we use the statutory definition
as the basis for our regulatory definition.
Although the commenters point out that one of the elements of
professional degree also includes CIP codes, as we state in the NPRM
(91 FR 4264), it is the Department's view that incorporating the four-
digit CIP code into the definition of professional degree in the
regulations is not inconsistent with the statute. Rather, this is
merely an outgrowth of Congress giving the Executive Branch the
authority ``to fill up the details'' of the statutory scheme.
[[Page 23784]]
West Virginia v. Env't Prot. Agency, 597 U.S. 697, 737, (2022)
(Gorsuch, J., concurring) (quoting Wayman v. Southard, 10 Wheat. 1, 42-
43 (1825)). The CIP code taxonomy incorporates the Department's
existing classification system to make the rule operational for
institutions and the Department. The higher education market is very
complex with over 4,000 institutions and tens of thousands of programs
that grant numerous types of degrees. Absent use of the CIP code
system, there could be confusion among institutions or even at the
Department regarding what specific programs are eligible for the higher
loan limits. These ``details'' may seem mundane, but they are critical
to ensuring that the rule is operationally feasible. Congress, through
the new amendments to the HEA and through statutes granting us broad
rulemaking authority, has empowered the Department to prescribe
regulations that make the underlying statute fully operational. Use of
the CIP code taxonomy makes the loan limits established in the Working
Families Tax Cuts Act operational.
In paragraph (1)(iv) of our definition of professional student in
Sec. 685.102, we note that a professional degree is a degree that
includes a four-digit CIP code in the same intermediate group as the
fields listed in paragraph (2)(i) of the definition of professional
student. We explain in the NPRM (91 FR 4264) and in discussion above
our basis for adopting a CIP code element in the definition of
professional student would ease administrative burden and remains
consistent with the statutory framework. Statute, and the definition
provided by Congress, supports our adoption of a CIP code standard in
the definition of professional student.
Relatedly, in paragraph (1)(ii) of the definition of professional
student, we include a provision that a professional degree is generally
at the doctoral level and requires at least six academic years of
coursework, including at least two years of post-baccalaureate level
coursework.\6\ As we explain in the NPRM (91 FR 4262), the illustrative
list of professional degrees in Sec. 668.2 provides contextual signs
under which we must rely upon as we apply the meaning of the operative
test to any degree program. Contrary to the commenters' assertion that
our definition goes beyond the scope of the HEA, we explain (91 FR
4262), the illustrative list of professional degrees in Sec. 668.2
provides contextual clues for applying the incorporated definition to
particular degree programs. The list shows that the incorporated
framework is not categorically limited to doctoral degrees, but it also
shows that the category is narrow and specific rather than open-ended.
The Department cannot overlook that, among the professional degrees
listed in Sec. 668.2, only one is not at the doctoral level. The
Department therefore did not read the statute either to require a
doctoral-only rule or to encompass all advanced non-doctoral programs.
Paragraph(1)(ii) reflects that contextual reading of the incorporated
definitions and is consistent with the statute.
---------------------------------------------------------------------------
\6\ The list of programs in Sec. 668.2 was based on the
definition of first-professional degree used by the National Center
for Education Statistics (NCES), which included the same limited 10
fields that are listed in Sec. 668.2 today (72 FR 62014). Because
the Department relied on this NCES definition to develop the list in
Sec. 668.2, we also used this historical definition to inform the
incorporated definition.
---------------------------------------------------------------------------
Changes: None.
Scope and Legal Effect of Professional Student Classification for Title
IV Loan Limit Administration
Comments: Many commenters objected to the Department's proposed
treatment of excluded fields on the basis that exclusion of students
enrolled in such programs from the professional student category would
trigger immediate adverse financial consequences beyond the applicable
Direct Unsubsidized Loan limits. Other commenters argued that the
Department's use of the term professional student carries legal and
practical implications outside of title IV administration by signaling
that excluded fields are less rigorous, less legitimate, or less
professionally recognized than the programs treated as qualifying
professional degree programs. Some commenters further asserted that
third parties, including payers, insurers, employers, credentialing
bodies, and malpractice carriers, could rely on the Department's
terminology in ways that disadvantage excluded professions. These
comments were especially pronounced from commenters with vested
interests in counseling, marriage and family therapy, social work,
nursing, and other practice-oriented fields, who argued that the
Department's terminology could be misread as relevant to reimbursement,
contracting, licensure recognition, or broader professional standing.
Discussion: The Department acknowledges these comments but
clarifies that the professional student designation is used solely for
purposes of administering title IV loan limit provisions. It is not
intended to provide, nor does it represent, a normative judgment
regarding the value of these programs. The Department acknowledges that
many people who work in counseling, marriage and family therapy, social
work, nursing, and other practice-oriented fields are professional and
deserve respect and praise for their work. And although we do not think
that Congress intended to cast aspersion on degrees like the Bachelors
of Nursing (BSN) program, it is likewise clear that Congress did not
want to make undergraduates eligible for professional degree loan
limits. Congress created undergraduate loan limits because it wanted
those programs to be treated distinctly. Indeed, loan limits for
undergraduates have been around for decades, and we do not think we are
breaking new ground by categorizing BSN programs as undergraduate
degrees rather than professional degrees for the purposes of higher
loan limits. Likewise, the Department has classified some degrees as
``professional'' for decades without projecting a normative judgment on
the degrees that are not considered ``professional.'' For these
programs, including graduate programs that do not meet the operative
definition, we disagree with commenters that by excluding certain
degree programs that we are degrading the normative value of these
programs. The term professional is long-standing and has appeared in
the Department's regulations for decades, well before this rulemaking.
In the same way, the taxonomy used here for only loan eligibility
purposes does not rank academic fields, confer professional
recognition, or determine whether a program, occupation, or degree
carries greater status, worth, legitimacy, or public value than
another. Nor does the Department interpret or apply this terminology to
govern State licensure, scope of practice, payer credentialing, insurer
recognition, reimbursement, contracting, employer treatment, or
malpractice coverage. Those matters arise under separate statutory,
regulatory, and private frameworks and are not controlled by the title
IV loan classifications adopted in this rule. The Department therefore
does not revise the rule based on commenters' concern that third
parties might misread title IV terminology for purposes beyond Federal
student aid administration. To the extent commenters urged the
Department to broaden the professional student category in order to
avoid perceived downstream signaling effects, the Department declines
to do so, because that is not a factor Congress directed the Department
to consider when classifying programs for the purpose of
[[Page 23785]]
higher loan limit eligibility. Indeed, the regulation does not create a
broader designation intended to resolve collateral questions of
occupational status or external professional recognition. The
Department therefore retains the NPRM's approach. The NPRM explains the
separate legal consequences of the graduate/professional borrowing
categories and the Department's implementation of the incorporated
professional degree framework for title IV loan limit purposes, as well
as the fact that the Department does not intend these categories to
serve any purpose outside of loan limits or represent the Department's
opinion as to the societal value that roles in any given field provide.
Changes: None.
Mistaken Causal Link Between Professional Student Definition and Loss
of Access to Grad PLUS Loans
Comments: A few commenters objected to the exclusion of their
degree program from the definition of professional degree, stating that
it prevents them from accessing Grad PLUS loans.
Discussion: The commenters misconstrue the new loan limits for
graduate students and professional students and the termination of the
Grad PLUS Loan for graduate and professional students. There are two
separate Direct Loan programs: the Direct Unsubsidized Loan program and
the Grad PLUS program. The new annual and aggregate loan limits for
graduate students and professional students are separate and apart from
the termination of the authority to make Grad PLUS loans to graduate
and professional students. Section 81001(1)(C) of the Working Families
Tax Cuts Act amended Section 455(a)(3)(C) of the HEA by terminating
eligibility for the Grad PLUS Loan program for all graduate and
professional students for any period of instruction beginning on or
after July 1, 2026. There is no difference between graduate and
professional students with respect to their access to Grad PLUS and the
new loan limits based on whether a student is a graduate student or
professional student. Separately, Section 81001(1)(B) of the Working
Families Tax Cuts Act amended Section 455(a)(4) of the HEA to include
new annual loan limits for graduate students and professional students
($20,500 and $50,000, respectively) for periods of enrollment beginning
on or after July 1, 2026. Section 81001(2) of the Working Families Tax
Cuts Act amended Section 455(a)(4)(B) of the HEA to include new
aggregate loan limits for graduate students and professional students
($100,000 and $200,000, respectively) for periods of enrollment
beginning on or after July 1, 2026. Unlike Grad PLUS loans, these
Direct Unsubsidized loan limits vary based on whether the student is a
graduate student or professional student.
Changes: None.
Non-Exhaustive List of Professional Degrees
Comments: Several commenters noted that our definition of
professional student adopts the definition of professional degrees in
Sec. 668.2 and that we acknowledged that the list of degrees is
illustrative and not exhaustive. These commenters believed that we are
inconsistent between definitions and that we treat the list of
professional degrees as exhaustive for determining eligibility for the
higher loan limits. Some commenters believed that the law does not
contemplate a narrow or exhaustive definition of professional degree,
while other commenters stated that we added clinical psychology to an
exhaustive list in Sec. 668.2.
Discussion: The Department believes we have remained consistent in
our definition. To be considered a professional degree, a degree must
meet the three-prong test and be similar in character to the degrees
Congress included in the illustrative list in the definition of
professional degree. Contrary to commenters' assertion, and as we
explain in detail in the NPRM (91 FR 4263), the list of professional
degrees in the definition of professional student need not be
exhaustive and is merely an illustrative list of degrees. We further
clarify that we do not assert that the list of included professional
degrees represents all degrees that may be professional in nature
offered by institutions. The list provides those degree programs that
we have identified as meeting the statutory definition of a
professional degree for the purposes of determining who is considered a
professional student and is subject to the higher loan limits.
Additionally, the definition's framework provides clear clues that, so
long as the operative definition and context allow, additional degrees
may be added to the list of professional degrees through future
rulemaking.
By stating that the law does not contemplate a narrow or exhaustive
definition of professional degree, we believe that commenters
mischaracterize our approach in defining professional student. The
Department provides key context to the statute in the NPRM (91 FR
4263); we explain our use of the interpretive canon noscitur a sociis
as an instructive canon to determine the universe of professional
degrees that are eligible for the higher loan limits. (``we rely on the
principle of noscitur a sociis--a word is known by the company it
keeps--to ``avoid ascribing to one word a meaning so broad that it is
inconsistent with its accompanying words, therefore giving unintended
breadth to the Acts of Congress.'' (quoting Gustafson v. Alloyd Co.,
513 U.S. 561, 115 S.Ct. 1061, 131 L.Ed.2d 1 (1995)) Yates v. United
States, 574 U.S. 528, 543, 135 S. Ct. 1074, 1085, 191 L. Ed. 2d 64
(2015)).
Here, we rely on the illustrative list of degrees provided by
Congress, as well as the historical context in which that list was
originally developed by the Department, to identify common
characteristics of those degrees. We further explain each of those
commonalities and attributes of these professional degrees.
With respect to adding the doctorate in clinical psychology to an
illustrative list of professional degrees, we explain in the NPRM (91
FR 4263-4264) how, during negotiated rulemaking, the Committee was able
to determine that the doctorate in clinical psychology met all of the
criteria in the definition of professional degree in Sec. 668.2 and
was substantially similar to the other professional degrees in the
definition. Although the commenters are correct that the list of
degrees in Sec. 668.2 is non-exhaustive, the professional degrees in
paragraph (2) of the definition of professional student is exhaustive
and the basis for including clinical psychology, as mentioned earlier,
is because that program meets all the criteria of the definition.
Changes: None.
CIP Code at the Two-Digit Level
Comments: Some commenters believed our definition of professional
student should include programs at the two-digit CIP code level,
specifically, CIP code 51 (Health Professions and Related Clinical
Sciences). These commenters believed that nursing, naturopathy, speech
pathology, audiology, rehabilitation and therapeutics, public health,
nutrition, and other allied health professions with a two-digit CIP
code of 51 should be considered professional degrees alongside
medicine, dentistry, pharmacy, chiropractic, and optometry, which are
established professional degrees under Sec. 668.2 that share the same
two-digit CIP code.
Discussion: We do not believe our definition of professional
student should include programs at the two-
[[Page 23786]]
digit CIP code level. As we explain in the NPRM (91 FR 4264), the CIP
code taxonomy for instructional programs is organized on three levels:
(1) A two-digit series of 48 general fields that groups a larger number
of related programs; (2) A four-digit series nested within each two-
digit series, which represents groupings of programs that have
comparable content and objectives within those two-digit fields; and
(3) A six-digit series that assigns unique six-digit codes to specific
instructional programs. We further explain in the NPRM (91 FR 4264) why
we believe the four-digit grouping is the more appropriate level for
classifying programs: two-digit groupings, as the commenters propose,
would be far too inclusive of programs that are not connected to
professional practice at that two-digit level. As an illustrative
example, we highlighted the CIP code for veterinary medicine (CIP code
01.80) and how veterinary medicine was categorically different from the
other CIP codes at that same two-digit level of 01 (91 FR 4264).
Therefore, it would be inappropriate to include professional degrees
based upon their classification at the two-digit CIP level, as these
would include certain programs that are categorically different from
the programs Congress included in its statutory definition.
Changes: None.
Professional Student Definition--Licensure, Entry-to-Practice, Degree
Characteristics, and Historical Degree Evolution
Degree Not Required for Initial Entry, But Required for Entry to
Practice
Comments: Some commenters argued that the Department incorrectly
applied the first part of the operative test, which requires
``completion of academic requirements for beginning practice in a given
profession'' for a program to be a professional degree. These
commenters claimed that their programs should be professional degrees
on the basis that they are required for initial entry into their chosen
profession and that there is no lower academic pathway that begins
practice. These commenters believed the Department mistakenly equates
``beginning practice'' with the lowest entry point in the field, rather
than the start of practice within the specific profession represented
by the degree. They said that this unfairly collapses two different
professional tiers with different licensure, certification, scopes of
work, and legal responsibility.
Discussion: The Department agrees that many degrees are required
for entry into a profession, but that this argument alone is not
sufficient to be a professional degree; these programs must meet each
element of the definition of professional student independently.
Ultimately, we disagree that ``beginning practice'' can be used for the
specific profession represented by the degree, rather than initial
entry into the field. These types of degrees train students for things
that are beyond ``beginning practice,'' and therefore they do not meet
the definition. As we explain in the NPRM (91 FR 4265), programs that
lead to degrees that are not necessary for entrance into a profession
cannot be considered professional degrees under the definition in Sec.
668.2. This approach aligns with the historical basis that underpins
the definition in Sec. 668.2 (72 FR 62014).
Changes: None.
Degree Includes Post-Baccalaureate Professional Training
Comments: Many commenters pointed to their programs' advanced-level
curriculum as evidence that they satisfy the second part of the
operative test, which ``requires a level of professional skill beyond
that is normally required for a bachelor's degree'' and therefore
should be included in the list of professional degrees. One commenter
argued that this specific wording in 34 CFR 668.2 does not imply that a
degree would not be a professional degree simply because one can obtain
a license after earning only a bachelor's degree. Instead, the
commenters argued that the definition allows for professional degrees
to include bachelor's degrees that require ``a level of professional
skill beyond that is normally required for a bachelor's degree,''
including additional hours of field education on top of a bachelor's
degree.
Discussion: As with other elements of the operative test, many
graduate programs fulfill the requirement that the program require ``a
level of professional skill beyond that is normally required for a
bachelor's degree.'' However, programs where their graduates obtain
work in the profession after earning only a bachelor's degree (91 FR
4266) would not require post-baccalaureate training and would therefore
fail this aspect of the three-part operative test. Therefore, such
programs do not meet the definition of professional degree because they
fail one part of the three-part operative test.
Changes: None.
Degree Is Generally Required for Professional Licensure
Comments: Many commenters claimed that additional programs should
qualify as professional degrees because they align with the third part
of the operative test: ``generally requires professional licensure''
(91 FR 4262). They emphasized that graduates cannot enter the
profession without completing an accredited program, passing a national
board or State licensure exam, and in many fields, maintaining ongoing
certification or continuing education. As a result, they claimed that
licensure should be an essential gatekeeping mechanism to determine
whether a program is a professional degree. A few commenters equated
State permits and Federal qualification standards to licensure, and
that this lack of uniform licensure should not disqualify the field
from being treated as a professional degree.
Discussion: The Department recognizes many graduate programs
prepare students to obtain professional licensure; however, this alone
is not sufficient to be a professional degree. Additionally,
preparation for licensure does not always correspond to a licensure
requirement as the operative test in Sec. 668.2 necessitates. In many
instances, licensure provides individuals with the possibility of
career advancement or additional responsibility but is not a
requirement to enter the profession (91 FR 4265). In other instances,
the regulatory landscape around licensure is inconsistent, so it is not
clear that licensure is required to enter those professions (91 FR
4265). Finally, in many fields, there are multiple pathways students
may take to qualify to sit for licensure exams. All of the programs on
the enumerated list have generally one pathway toward licensure,\7\
which includes earning the requisite degree first prior to sitting for
a licensure exam. Since these pathways divert from the enumerated list
of professional degrees, programs where there are alternate pathways to
licensure
[[Page 23787]]
are unlikely to be considered professional degrees (91 FR 4265).
---------------------------------------------------------------------------
\7\ The Department acknowledges that there are alternative
pathways to become licensed in a profession for a few of the degrees
on the on the enumerated list. These circumstances are narrow. For
example, the State of California does not require individuals to
earn a law degree prior to sitting for the bar in narrow
circumstances. However, the overwhelming number of jurisdictions
require a law degree prior to being eligible to become a licensed
attorney. In addition, the Department acknowledges that the pathway
to being in the clergy varies widely among religions with some
faiths requiring theology degrees while others do not. The
Department does not think these minor deviations overcome the
general principle that the enumerated degrees typically require a
specific pathway where a degree is earned prior to licensure.
---------------------------------------------------------------------------
Changes: None.
Supervision Should Not Be a Dispositive Factor in Whether Program Is
Professional Degree
Comments: Some commenters objected to what they understood as the
Department's reliance on supervision, collaboration, or the absence of
immediate independent practice as a reason to exclude certain programs
from the professional degree category. These commenters argued that the
incorporated definition in 34 CFR 668.2 does not refer to supervision,
independent practice, or collaborative practice arrangements and
therefore does not permit the Department to treat those concepts as
freestanding disqualifying criteria. In their view, the relevant
question is whether the degree signifies completion of the academic
requirements for beginning practice in a licensed or regulated
profession, not whether the graduate may later practice under some form
of supervision, collaboration, or transitional oversight.
Some commenters also asserted that the Department's reliance on
supervision in some States overlooks the dynamic and evolving nature of
State licensure frameworks and wrongly treats supervision as equivalent
to subordinate status, even though many jurisdictions recognize broader
Advanced Practice Registered Nurses (APRN) authority, for example.
Other commenters argued that the proposed rule's supervision rationale
is internally inconsistent because clinical residency in medicine and
postgraduate training in clinical psychology are also forms of
supervised practice. Still others maintained that State-by-State
variation in supervision or collaborative-practice requirements should
not determine a nationwide, Federal classification, particularly where
commenters believed nurse practitioner programs otherwise meet the
incorporated elements of 34 CFR 668.2.
Discussion: The Department does not agree that these comments
warrant revision of the final rule. The NPRM (91 FR 4264-66) did not
adopt supervision, collaboration, or the absence of immediate
independent practice as freestanding disqualifying criteria. Rather,
the Department explained that it was applying the incorporated
professional degree framework in light of the contextual significance
of the illustrative list and, in that context, was not persuaded that
degrees leading to employment that ordinarily must be supervised by a
licensed professional in a different occupation and cannot be performed
independently fit within that framework. Commenters' analogies to
medical residency, clinical psychology internships or postdoctoral
experience, and similar forms of supervised professional development,
do not alter that conclusion. Those examples show only that supervised
practice may exist within recognized professional pathways as part of
the training process for those professionals. Supervision in this
context is temporary, and after the training is complete, supervision
is no longer required. Medical residents and medical fellows become
attending physicians; clinical psychology interns become clinical
psychologists. The relevant inquiry is how the degree ordinarily
functions within the incorporated framework, not whether some
supervision exists somewhere after degree completion.
The Department likewise does not agree that variation in State
supervision and practice-authority is relevant to determining whether a
program may be considered a professional degree. To implement Section
455(a)(4)(C)(ii) of the HEA, the Department used the tools of statutory
construction to determine what programs were substantially similar to
the list outlined in Sec. 668.2. Supervision, collaboration, and
practice authority is consistent among the list of professional degrees
in Sec. 685.102(b)(ii)(A) in that people who practice these
professions may obtain a license and practice without supervision of
another licensed professional, and, to the extent they are supervised
at the beginning of their careers, it is by someone who holds the same
degree and practices the same profession; it is not for the degrees
mentioned with varying State supervision and practice authority. We
decline to amend the regulations to create a dynamic classification
keyed to a certain numerical court of State laws, as this would
undermine clarity, predictability, and nationally uniform
administration.
Changes: None.
Specialization and Concentration
Comments: Several commenters disagreed with our exclusion of their
field as a professional degree and stated that these programs prepare
graduates for a distinct profession, not just specialization or a
concentration. These commenters argued that although an individual with
a bachelor's degree may gain an entry-level position in their field,
independent clinical practice requires an advanced post-baccalaureate
degree from an accredited program followed by supervisory practice and
successful completion of a licensing exam.
Discussion: We disagree with the commenters' assertion. In at least
one field, in the NPRM (91 FR 4266), we acknowledge that an individual
who obtains an advanced degree may assume a supervisory role in that
field or take on more responsibilities. While such work is different
from that in a lower role, we do not believe that the statute permits
classification of a specialization or concentration as a separate and
distinct profession in most circumstances. Indeed, the profession in
which the graduate is entering is still generally the same profession,
regardless of the specialty associated with that advanced degree. There
are, of course, exceptions to this general rule. For example, a nurse
practitioner is a distinct profession from being a registered nurse
(which generally requires a bachelor's or associate degree). Relatedly,
we also disagree with the commenters' argument that independent
clinical practice requires these advanced degrees. However, a person
may obtain work in some of these fields after earning only a bachelor's
degree; therefore, the additional advanced degree in these fields is
beyond what is required for ``beginning practice in a given
profession'' as stated in paragraph (1)(ii) of the definition of
professional student. In some fields, individuals who are licensed with
a bachelor's degree may later obtain an advanced degree with only one
year of additional coursework for a total of five years of education
compared to six years as provided for in paragraph (1)(ii) of our
definition of professional student. Therefore, these programs do not
meet our definition.
Changes: None.
Evolution of the Profession to Advanced Degrees
Comments: Several commenters disagreed with the Department's
approach to put significant weight on the historical treatment of
``first-professional degrees'' and the illustrative list derived from
the National Center for Education Statistics (NCES) classifications
when determining the list of professional degrees, rather than
considering the degrees that are required for lawful entry into a
profession today (91 FR 4266). These commenters asserted that it is not
relevant that the Department has never previously included these
degrees in the definition of professional degree if they are now the
only degrees available for students to enter that profession. These
commenters noted the evolution of their profession: formerly,
[[Page 23788]]
one only needed a master's degree to enter the field but now, one needs
a doctoral level degree. These commenters argued that this progression
of needing a higher credential occurred in other health professions
that are already on the list of professional degrees.
Discussion: The Department believes the former inclusion of such
programs in the definition of professional degree is relevant. As we
state in the NPRM (91 FR 4266), the Department must adhere to the
decisions in Loper Bright Enters., 603 U.S. 369, 386 (2024) and NLRB v.
Noel Canning, 573 U.S. 513, 525 (2014), which limits how we may expand
the interpretation of a professional degree. Some commenters contended
that certain fields have shifted over time to higher entry credentials
and that the Department should account for that evolution in
identifying professional degrees. As explained in the NPRM (91 FR
4266), later movement of a field to a higher credential level does not
itself alter the incorporated definition in Sec. 668.2 or provide a
basis to expand that definition beyond its text. Where programs later
migrated to higher credential levels but were not incorporated into the
existing definition over time, the Department does not treat that later
credential escalation alone as a basis for inclusion. Since some degree
programs progressed to higher credential levels after the creation of
the list of ``first professional degrees,'' but were not adopted into
the definition in intervening years, we believe we cannot include these
programs and remain ``consistent over time'' and represent ``the
longstanding practice of the government,'' which is what Loper Bright
cautions against.
Changes: None.
Transparency, Predictability, and Implementation Clarity in
Administration of the Professional Student Provisions
Comments: Some commenters argued that the Department should provide
greater transparency and clearer criteria regarding which programs
qualify. These commenters generally sought a rule that institutions and
borrowers could apply consistently without needing to infer eligibility
field by field or program by program. A recurring theme was that
ambiguity in program identification could create uneven treatment
across institutions, confusion for borrowers, and operational
difficulty for financial aid administrators. For example, commenters
from the architecture field emphasized that degree pathways have
multiple naming conventions. Other commenters requested clearer
signals, broader publication of qualifying groupings, or some form of
predictable inclusion methodology so that students could know in
advance whether a program would be treated as graduate or professional
for loan limit purposes. Institutions also raised broader
implementation concerns and asked the Department to provide as much
clarity and transparency as possible so they could update policies,
systems, communications, and advising before the 2026-2027 award year.
Discussion: The Department acknowledges these comments and agrees
that transparency, predictability, and clarity in implementation are
important. The Department also recognizes that institutions and
students benefit from a framework that can be applied consistently
across programs and institutions without requiring repeated case by
case judgments. The Department believes, however, that the bounded
approach reflected in the NPRM (91 FR 4263-65) is itself the clearest
and most consistent way to implement the statutory cross reference
because it avoids an open-ended system in which institutions or
commenters would continually seek individualized additions, exceptions,
or reinterpretations. At the same time, the Department recognizes the
value of clear implementation signals and may provide additional
clarification, as appropriate, regarding how the final rule is applied.
The Department believes the use of the CIP code taxonomy will also help
to make it clearer to institutions and students the way each program is
classified.
Changes: None.
Directed Questions
Analysis Relating to Professional Degrees in Professional Student
Comments: Several commenters responded to our request for comments
in the NPRM (91 FR 4261) regarding our analysis of professional degrees
included in or excluded from the definition of professional student. In
the NPRM (91 FR 4261), we specified that it would be useful to have
feedback on how we applied the operative definition of professional
student and utilized the context of the illustrative list of degrees
when interpreting the definition.
Several commenters believed that various graduate-level nursing
programs, such as the Master of Science in Nursing (MSN), Doctor of
Nursing Practice (DNP), Doctor of Nurse Anesthesia Practice (DNAP) lead
to employment in distinct professions (nurse practitioners, clinical
nurse specialists, certified nurse midwives, and certified registered
nurse anesthetists), sometimes collectively referred to APRNs). These
commenters stated that these programs were fundamentally distinct from
that of Registered Nurse and met the operative definition's three-part
test and argued that completion of these programs signifies completion
of academic requirements for beginning practice; requires skill beyond
the baccalaureate level; and leads to licensure. Another commenter
provided a detailed analysis and believed that our definition of
professional student departed from the statutory framework Congress
enacted in the Working Families Tax Cuts Act. Finally, one commenter
from a professional association representing naturopathic medicine
claimed that we made an ultra vires reinterpretation and unlawful
narrowing of an ``included but not limited to'' definition for
professional student; and alleged that naturopathic medical programs
met the statutory three-part test; naturopathic medical programs have
been classified as a first-professional degree since 1999; and, that
our exclusion of the naturopathic medical programs from professional
degrees imposed a ``majority of States'' requirement that is beyond our
authority.
Discussion: Although we appreciate the feedback from these
commenters, we disagree with these assertions.
With respect to the commenters who argued that APRNs should be
considered to hold a distinct professions, the Department agrees that
nurse practitioners, clinical nurse specialists, certified nurse
midwives, and certified registered nurse anesthetists, hold unique
roles that are specialized in nature and all require training at the
graduate level--a MSN or Doctor of Nursing Practice DNP in the case of
nurse practitioners, clinical nurse specialists, and certified nurse
midwives; a DNP or a DNAP in the case of certified registered nurse
anesthetists. Therefore, as a result, the Department acknowledges that
nurse practitioners, clinical nurse specialists, and certified nurse
midwives, and certified registered nurse anesthetists can all be
considered to hold a fundamentally distinct profession, both in respect
to other APRNS, as well as to Registered Nurses.
In response to commentors' assertions that the MSN, DNP, and DNAP
meet the operative definition's three-part test, we explain in the NPRM
(91 FR 4262) that, in addition to the operative test, the definition of
professional student also provides for an illustrative list of advanced
degrees that are professional degrees and meet our definition.
[[Page 23789]]
Graduate-level nursing programs meeting the operative definition's
three-part test, alone, would not constitute that program satisfying
all elements of the definition of professional student. As we explain
more fully in the Section titled ``Graduate-level nursing (Master of
Science in Nursing (MSN), Doctor of Nursing Practice (DNP), Doctor of
Nurse Anesthesia Practice (DNAP) degree programs'', while these
programs may satisfy the operative definition's three-part test, they
do not satisfy the contextual requirements provided by the illustrative
list of advanced degrees included within the definition of professional
student.
We also disagree with the second commenter who asserted our
definition of professional student departed with the statutory
framework. Throughout the NPRM (91 FR 4262-67), we explain our basis on
how we crafted the definition of professional student to comport with
the statute. As noted in Section 455(a)(4)(C)(ii) of the HEA, we
highlight that Congress borrowed and codified the Department's
definition of professional degree in Sec. 668.2. We further explain
that we must identify the best reading of the statute using the tools
of statutory construction. In addition to the noscitur a sociis, canon,
which, as discussed above, requires us to determine what the enumerated
degrees have in common and take that into account when determining
whether another degree should be considered a professional degree, the
Department also considers the surplusage canon when making this
determination. The canon against surplusage holds that every part of a
statute should be given meaning and effect.\8\ Here, we would not
presume Congress provided a merely illustrative list of degrees without
intending that list to have some legal consequence. The purpose of the
list is to help distinguish professional degrees from graduate degrees.
We give effect to this provision by identifying the common
characteristics of those degrees, examining the historical context that
underpins the list, and evaluating other degrees in light of those
commonalities. The Working Families Tax Cuts Act limited our authority
to distribute student loans by capping the amount of loans each student
could take out. Congress specified different caps for different post-
bachelor's degrees. Indeed, Sec. 81001(C) distinguishes between
graduate credentials and a professional degree. Interpreting the
provided list of professional degrees as merely a list of degrees
Congress specifically considered professional degrees with no further
legal effect would allow circumvention of these caps by allowing a
number of graduate programs to take advantage of the higher loan limits
allotted to professional degrees. Construing the list as we have done
furthers general policy set forth in the statute to set higher loan
limits for a narrow group of programs. If Congress had intended to
expand the list substantially beyond the programs enumerated in Sec.
668.2, it would have directed the Department to do so. However, it did
not. The Department cannot write a regulation to reflect a meaning that
commenters wish it had, however popular, but must instead interpret the
statute based on its wording and established methods of statutory
interpretation.
---------------------------------------------------------------------------
\8\ Scalia & Garner, Reading Law, 176 (2012) (``If possible,
every word and every provision is to be given effect. None should be
needlessly given an interpretation that causes it . . . to have no
consequence.''); see also Straub v. BNSF Ry. Co., 909 F.3d 1280,
1287 n.8 (10th Cir. 2018).
---------------------------------------------------------------------------
Finally, with respect to the third commenter, we disagree with the
assertions made. Contrary to the commenter's argument, the proposal
would not have unlawfully narrowed the definition of professional
degree. The Department did not claim that the proposed definition was
fixed and unalterable. To the contrary, the degree programs that are
developed in the future have the opportunity to satisfy the definition
of a professional degree if they meet the operative test and the
program is consistent with the contextual elements. We address the
commenter's concern in the NPRM (91 FR 4263), and we specify that the
list of degrees in the professional student definition is not
exhaustive and includes an illustrative list of degrees; and we assert
that so long as the operative definition and context allow, we could
add additional degrees to the list of professional degrees through
future rulemaking. However, the context definition limits overly broad
interpretations. Indeed, the interpretive canon noscitur a sociis
provides that the vague or ambiguous terms are often given a more
precise meaning when read in the context of the broader provision in
the statute. And to the degree the definition is ambiguous, we look for
commonalities between the enumerated list of professional degrees to
provide clarity when considering if other degrees should be classified
as ``professional degrees.'' Therefore, we do not find credence in the
commenter's assertion that we unlawfully narrowed the definition of
professional student.
To the degree the commenter is suggesting that the Department lacks
the authority to regulate on defining professional degree, we disagree.
In Section 81001 of the Working Families Tax Cuts Act, Congress adopted
the regulatory definition of professional student that was currently in
the regulations. Specifically, the Act states ``the term `professional
student' means a student enrolled in a program of study that awards a
professional degree, as defined under section 668.2 of title 34, Code
of Federal Regulations (as in effect on the date of enactment of this
paragraph), upon completion of the program.'' Congress essentially used
a copy-and-paste function whereby the statute means what the regulation
said on the date of enactment. Congress did not permanently enshrine
the regulation itself, rather it directed the Department to consider
the words of that regulation at the time of enactment as if it were a
statute. This is a static reference, not a dynamic reference, and the
Department has no power to change or alter the statute. The statute is
invariably the text of the regulation on the date of enactment; and the
Department may regulate to expound upon the meaning of the statute, as
we have done in this rule.
Commenters are confused about this fundamental point in that they
seem to assert that Congress enshrined the text of the regulation in 34
CFR 668.2 and made it unalterable by the Department. Congress did
nothing of the sort: they created a new statute but chose not to, for
whatever reason, paste the words of the regulation into the Act and
used a cross reference instead. Had Congress wished to halt the
Department from making regulatory changes in the CFR, they would have
been explicit like they did in Section 85001 and Section 85002, where
they enshrined previous versions of other Department regulations for a
period of time. Instead, Congress incorporated the words of the
regulation into the statute through a reference to a text to the
regulation. Congress's decision to create binding statutory text
through this reference has no bearing on the Department's authority to
regulate. Commenter's attempt to glean interpretive meaning from this
typographical drafting choice is misplaced.
The regulation itself is vague and begs to be expounded upon.
Millions of students who are enrolled in tens of thousands of programs
participate in the Direct Loan program every year. All those students
must have clear information regarding how much they are eligible to
borrow from the Department. Because professional students can borrow up
to $50,000 annually, while graduate students may borrow up to $20,500
annually, it is important that students know which
[[Page 23790]]
category their program is in. The new statute provides some clarity. We
know for certain that if a student is enrolled in one of the 10
programs explicitly listed in 34 CFR 668.2, then they are eligible for
up to $50,000 in loans each year. But the statute does not preclude
programs not explicitly listed in the existing regulation from being
considered professional degrees in certain circumstances. If the
Department does not regulate on this issue, there will be profound
confusion as to which students are eligible for the higher loan limits.
As such, it is clear that the Department is not foreclosed from
regulating to fill in the details regarding which programs are
considered professional degrees, and which are not.
In regard to the commenter's assertion that naturopathic medical
programs have been classified as first-professional degrees in NCES for
the purposes of IPEDs, that is not relevant here. Instead, we are
interpreting the statute provided under the Working Families Tax Cuts
Act, which does not reference IPEDS reporting classification. Rather,
the statute has an operative test and there is contextual information
in the illustrative list of degrees that helps to further interpret the
definition.
Naturopathic medicine is illegal in several States. See Fla. Stat.
Sec. 458.305, S.C. Code Ann. Sec. 40-31-10, and Tenn. Code Ann. Sec.
63-6-205. The definition requires, among other things, that the degree
signifies the beginning of practice in a profession where
``[p]rofessional licensure is also generally required.'' Here,
professional licensure is not ``generally required'' because the
practice is altogether prohibited in certain States. In contrast, every
degree on the illustrative list leads to professions that are legally
permissible in every State. Naturopathic Medicine cannot legally
operate in any capacity in certain States and therefore they do not
meet the definition of professional degree for purposes of higher loan
limits. As we state throughout this final rule, the Department does not
make a normative judgment regarding the practice of professions that it
does not classify as professional for loan limit purposes, including
Naturopathic Medicine.
Changes: None.
Pre-Existing Interest on Prior Use of Professional Degree
Comments: A few commenters responded to our directed question that
asked commenters to identify any interest in the prior use of the term
professional degree that will be impaired by the definition's adoption
in this rule (91 FR 4262). One commenter claimed that this definition
of professional degree will reduce access to the funding needed for
students to pursue their education and exacerbate healthcare workforce
shortages.
Another commenter claimed that our definition of professional
degree would affect the architecture profession, where licensure is
required to practice. To be licensed as an architect, students must
pass an exam after completing what accredited architecture schools deem
are ``first professional degrees,'' which includes both the five-year
Bachelor of Architecture and the two-year to three-year Master of
Architecture. This commenter believed that changing the definition of
professional degree as it relates to the licensure process may
negatively affect the field.
Discussion: We thank the commenters for addressing our question in
the NPRM (91 FR 4262) but decline to make any changes to the
definitions in Sec. 685.102(b). As for the first commenter, we do not
believe that the potential for reduced access or workforce shortages is
relevant in how we interpret the term professional student. Although we
share the commenters concern broadly about workforce shortages, the
kind of analysis the commenter is calling for is outside the scope of
this rule. There is nothing in the operative definition or the
illustrative list that would suggest that Congress wanted the
Department to consider workforce shortages.
The Department notes that the paths to becoming a licensed
architect differ from State-to-State and, while some require an
individual to hold a bachelors or master's degree in architecture, this
is not universally the case, as some States allow applicants for
licensure to substitute work experience in place of a degree (in some
cases, allowing even individuals with no higher education at all to
obtain licensure as architects).\9\ As such, completion of a bachelor's
or master's programs does not necessarily signify beginning practice in
the architect profession because there are alternative pathways
(without a degree) to becoming an architect.
---------------------------------------------------------------------------
\9\ Nat'l Council of Architectural Registration Bd.s, Licensing
Requirements Tool, <a href="http://Ncarb.com">Ncarb.com</a> <a href="https://www.ncarb.org/get-licensed/licensing-requirements-tool">https://www.ncarb.org/get-licensed/licensing-requirements-tool</a> (last visited Apr. 15, 2026).
---------------------------------------------------------------------------
We also disagree with the second commenter's supposition that the
use of professional degree in this rule will impact how the
architecture profession screens applicants for examination. Their
argument proves to be too much. The term professional student in Sec.
685.102(b) only affects the maximum amount that eligible individuals
may borrow under the Direct Loan program. Furthermore, architecture
degrees have never been classified as professional degrees under the
Department's regulatory definition in Sec. 668.2. Commenters do not
claim to have suffered reputational damage from that longstanding
regulation, but suddenly now that the Department is promulgating a rule
for loan eligibility purposes, reputational injury will flow. The
Department finds this to be rhetorical hyperbole. But even if we
assumed there would be reputational harm, Congress did not direct the
Department to take into account such harm when classifying degree
programs as professional degrees or graduate degrees.
Changes: None.
Enumerated List of Professional Degrees
Preservation of Included Professional Degree Classifications
Comments: Some commenters referenced fields already recognized as
professional degrees under current Sec. 668.2. These commenters urged
the Department to keep these as professional degree programs in the
final rule. Other commenters urged the Department to include additional
fields that were not specified in the NPRM so that these borrowers
could receive higher loan limits. Specifically, commenters referenced
medicine, osteopathic medicine, dentistry, pharmacy, chiropractic,
optometry, podiatry, veterinary medicine, theology, law, and clinical
psychology as examples of programs that remain within the existing
incorporated framework and argued that those fields should continue to
be treated as professional degree programs and that excluded fields
should be analyzed more analogously to them.
Commenters stated that, similar to chiropractic, optometry,
podiatry, veterinary medicine, and clinical psychology, other fields
were also licensed or practice-oriented fields. These commenters stated
we were being underinclusive and internally inconsistent. Some
commenters more specifically emphasized that medicine and osteopathic
medicine require doctoral level education, extensive supervised
clinical training, national licensing examinations, State licensure for
independent practice, and ongoing professional competency requirements,
and they urged the Department to preserve those programs as
professional degree programs.
Other commenters likewise highlighted podiatry and veterinary
medicine as already included
[[Page 23791]]
professional pathways involving intensive clinical preparation,
national examinations, direct patient or public health responsibility,
and significant workforce importance. Other commenters discussed the
importance of veterinary medicine, and, in particular, emphasized the
cost and intensity of veterinary education and its importance to animal
health, food safety, zoonotic disease response, rural practice, and
broader public health.
A smaller number of commenters pointed to chiropractic specifically
as an example of what they viewed as internal inconsistency, arguing
that retaining chiropractic while excluding other contemporary
licensure leading programs was arbitrary and unsupported.
Discussion: The Department is retaining the professional degree
classifications already recognized under the incorporated framework,
including all the degree programs referenced by the commenters in the
summary directly above. As explained in the NPRM (91 FR 4260-63),
Congress referenced the Department's current definition of professional
degree in Sec. 668.2 when writing the Working Families Tax Cuts Act.
Because Congress inserted a cross-reference to professional degree, the
ten-degree categories in the illustrative list of advanced degrees are
professional degrees and meet the definition. The statute explicitly
includes such degrees in the definition and therefore the Department is
foreclosed, by statute, from removing them. And as explained above, the
Department believes that even though it is not explicitly referenced on
the list, clinical psychology meets the operative test and satisfies
the contextual elements of professional degree. No further interpretive
work is required for these degree programs to be classified as
professional degrees. The Department therefore considers professional
degrees, such as medicine, osteopathic medicine, dentistry, pharmacy,
chiropractic, optometry, podiatry, veterinary medicine, theology, law,
and clinical psychology as professional degrees whose students are
considered professional students for purposes of higher loan limits.
To the extent commenters referenced psychiatry, the Department
understands those programs relating to medicine or osteopathic
medicine, not a separate degree category. Students pursuing an M.D. or
D.O. are considered professional students for the purposes of the
definition regardless of the specialty they enter, including
psychiatry.
The Department likewise declines to adopt commenters' argument that
excluded programs should be treated similarly to chiropractic,
optometry, podiatry, veterinary medicine, clinical psychology, or other
already included fields merely because commenters view those programs
as analogous in rigor, licensure structure, clinical responsibility, or
public importance. As explained in the NPRM (91 FR 4262-65) and
elsewhere in this final rule, among other requirements, the Department
considers a three-part operative test to determine if a degree is a
professional degree.
The Department therefore retains the NPRM's (91 FR 4261) treatment
of the enumerated included fields while declining, for the reasons
discussed elsewhere in this section, either to remove legacy included
fields or to broaden the category beyond the incorporated framework.
Changes: None.
Comments: Several commenters argued that chiropractic and theology
should not be classified as a professional degree, especially if fields
such as nursing, engineering, and public health are excluded.
Commenters frequently described chiropractic as lacking a strong
evidence base, calling it ``pseudoscience'' or ``quackery,'' and
asserted that its scientific rigor does not compare to excluded
licensed health professions. Similarly, numerous commenters challenged
the inclusion of theology as a professional degree, arguing that
theological degrees do not require State licensure, are not mandatory
for entry into ministry, and therefore fail the operative test in the
NPRM (91 FR 4262).
Discussion: The Department declines to remove these degrees from
inclusion in the definition. Congress amended Section 455(a)(4) of the
HEA to add the definition of professional student as defined in Sec.
668.2 as of the time of enactment. Consequently, the Department does
not have the authority to reclassify these programs as graduate
degrees, as they must retain their professional classification.
As explained above, the statute explicitly includes such degrees in
the definition and therefore the Department is foreclosed, by statute,
from removing them. No further interpretive work is required for these
degree programs to be classified as professional degrees.
In promulgating the definition of professional degree in 34 CFR
668.2, the Department did not consider the lack of State licensure for
individuals with theology degrees to be dispositive. The First
Amendment would not permit a State or the Federal government to require
professional clergy to be licensed to act as religious leaders. The
Free Exercise Clause of the First Amendment prevents excessive
government entanglement in the exercise of religion. Indeed, even
broadly applicable and facially neutral labor laws do not apply to the
employment of clergy under what is known as the ministerial exception.
See Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church, 344
U.S. 94, 116 (1952) (``Freedom to select the clergy, where no improper
methods of choice are proven, we think, must now be said to have
Federal constitutional protection as a part of the free exercise of
religion against State interference''); Hosanna-Tabor Evangelical
Lutheran Church & Sch. v. EEOC, 565 U.S. 171, 188-189 (2012) (``By
imposing an unwanted minister, the State infringes the Free Exercise
Clause, which protects a religious group's right to shape its own faith
and mission through its appointments.'') Additionally, the Department
notes that the fact that professional clergy have long been considered
an exception to the rule that licensure is part of what defines a
profession.\10\
---------------------------------------------------------------------------
\10\ See John W. Wade, Public Responsibilities Of The Learned
Professions, 21 La. L. Rev 130 (``What do we mean when we speak of
the learned professions? . . . We think of law, medicine, the
ministry and teaching. . . The State licenses the admission to the
particular learned professions--all, that is, except ministers, for
reasons which are obvious.'').
---------------------------------------------------------------------------
Changes: None.
Business, Master's in Business Administration (MBA), and Accounting
Comments: The Department received comments from business school
stakeholders, accounting faculty, accounting organizations, State
certified public accountant (CPA) societies, and students urging it to
treat certain business and accounting graduate programs as professional
degree programs. Commenters generally argued that the MBA and related
graduate business programs are practice oriented, may be accreditation
driven, and often function as career entry, career critical, or
leadership credentials. Some commenters, including institutions,
emphasized that MBA and executive MBA programs serve working
professionals, regional leadership pipelines, and workforce needs in
business, healthcare, agriculture, education, government, and nonprofit
management, and argued that restricting access to higher borrowing
limits would reduce educational access and economic mobility in
underserved regions. Other commenters urged the Department to expand
professional degree treatment to doctoral business programs, including
[[Page 23792]]
the Doctor of Business Administration (D.B.A.) and business-related
Ph.D. programs, arguing that those degrees prepare future faculty,
business leaders, and administrators, and are increasingly expected for
academic and leadership roles.
A subset of commenters urged the Department to treat accounting
pathways, particularly those intended to prepare students for CPA
licensure, like other included professional programs. These commenters
emphasized public protection responsibilities, ethical obligations,
State licensure requirements, and the central role of CPAs in
attestation, auditing, tax, and financial reporting. Several State CPA
societies argued that graduate accounting programs remain a critical
and widely used route to CPA licensure, even where States now provide
more than one educational pathway. For example, commenters emphasized
that their State allows either a bachelor's degree plus two years of
experience, or a master's degree plus one year of experience, both
coupled with the passage of the Uniform CPA Examination and
satisfaction of ethics and competency standards as pathways to
licensure.
Other commenters argued that even where a master's degree is not
universally required, accounting should still qualify, as graduate
study is often the practical route to meet the 150-credit hour
expectation, the profession is heavily regulated, and the work
implicates public trust and economic stability. Some commenters also
urged the Department to either include accounting expressly or to
retain non-exclusive phrasing that would preserve flexibility for
inclusion of accounting and similarly situated programs.
Some also requested clarification regarding accounting
concentrations housed within business schools and how program
identification would be administered for business-related degrees.
Discussion: The Department is not revising Sec. 685.102 to treat
MBA, graduate accounting, or related business programs as professional
degree programs. As explained in the NPRM (91 FR 4260-65), the final
rule implements Congress's cross-reference to the existing definition
of professional degree in 34 CFR 668.2 for title IV loan limit purposes
by applying the incorporated framework Congress chose, rather than
treating that cross-reference as an open-ended basis for expanding the
category to additional fields.
The Department does not adopt commenters' requests because, as the
NPRM (91 FR 4265) specifically explained, an MBA does not satisfy the
incorporated professional degree definition where it is not required
for entrance into a specific profession and does not itself carry
accompanying licensure. The NPRM (91 FR 4265) further explained that
even if MBA coursework may satisfy certain prerequisite requirements
relevant to another licensed field, that does not make the MBA itself a
licensure qualifying professional degree. Put plainly, there is no
single recognized profession that an MBA prepares students to enter.
For the same reason, the Department declines to consider other business
programs, such as an executive MBA, D.B.A., or related business
doctoral study as professional degrees. The Department does not contest
that these programs may have career value or otherwise assist students
in satisfying certain prerequisite licensure requirements. But, for
example, to obtain licensure as a certified public accountant, an
applicant must have completed 150 credit hours of coursework but is not
required to have earned a specific post-baccalaureate degree, which is
relevant when the Department determines whether a specific degree is a
professional degree.
The Department also disagrees with commenters that advanced
accounting degrees beyond the baccalaureate level should be considered
professional degrees. As the commenters themselves concede, these
master's degrees are not required, in general, to become a Certified
Public Accountant (CPA). Even though students must have completed 150-
credit hours or 225 quarter hours to sit for the Uniform CPA
Examination, there is no specific requirement to earn a master's
degree. In other words, the master's degree does not signify the
beginning of practice in a given profession, because earning 150 credit
hours is the primary determinate. In general, undergraduate accounting
students can take all of the requisite coursework required to sit for
the exam as part of their baccalaureate coursework, although the
Department acknowledges that most institutions require less than 150
credit hours to graduate.
Changes: None.
Education (M.Ed./Ed.D./Ed.S./MAT and Teacher-Preparation Concerns)
Comments: The Department received many comments urging it to treat
educator-preparation degrees and related graduate education programs as
professional degree programs or otherwise to provide greater borrowing
capacity for educators. These commenters emphasized teacher shortages,
supervised field and clinical components, and the importance of
graduate study to licensure advancement, leadership, and specialization
in education.
Many commenters argued that the Department's approach understates
the role of graduate and post-baccalaureate education in modern
educator preparation, particularly for school leadership, specialized
instructional support, endorsements, and career change pathways.
Commenters also argued that limiting graduate borrowing for educators
will disproportionately burden lower income, first generation, and part
time students and weaken the teacher pipeline, including in specialized
teaching fields and underserved communities. In discussing education
related pathways, commenters repeatedly referenced the Master of Arts
in Teaching (MAT), Master of Education (M.Ed.), Education Specialist
(Ed.S.), Master of Library Sciences (MLS), and Doctor of Education
(Ed.D.) programs associated with certification, licensure advancement,
specialization, or leadership roles in education.
Another commenter asserted that many graduate education programs
provide initial certification for school administrators or other
specialized roles and that those positions often require 30 to 60
graduate credit hours, supervised clinical practice, and licensure
assessments beyond a bachelor's degree. Individual educator commenters
similarly argued that the Department's focus on entry into classroom
teaching is too narrow, because school leadership and certain
specialized roles require a completed master's degree as a gatekeeping
credential.
Other commenters argued that many individuals who change careers
pursue master's level programs for initial certification, particularly
in high need fields, and that degree titles vary across institutions
and States even where the programs lead to regulated professional
roles. Still, others urged the Department to include post-baccalaureate
certificates and other educator preparation programs, including
programs leading to initial certification or additional educator
endorsements, arguing that the proposed framework does not fit how
educator preparation operates for working adults, part time students,
and mid-career professionals.
Discussion: The Department is not revising Sec. 685.102 to treat
education pathways, including the M.Ed., Ed.D., Ed.S., MAT, MLS, and
related educator-preparation or educator advancement programs, as
qualifying professional
[[Page 23793]]
degree programs. As explained in the NPRM (91 FR 4260-63), the final
rule implements Congress's cross-reference to the existing definition
of professional degree in 34 CFR 668.2 for title IV loan limit
purposes. In applying that incorporated definition, the Department
looks to the structure of the three-part operative test, and the
context supplied by the enumerated examples. The characteristics of the
program, and the requirements of the profession, rather than broader
workforce need, public importance, or the general professional value of
the work.
The NPRM (91 FR 4260-63) then specifically concluded that the M.Ed.
and Ed.D. do not satisfy the incorporated professional degree
definition because they are not required for entrance into a specific
profession or for licensure. It further explained that, although
several States ultimately require teachers to obtain a master's degree
to maintain a license, no State requires an M.Ed. or similar master's
degree to begin work as a teacher, and an Ed.D. may offer career
advancement but is not required for entrance into a specific profession
or as a prerequisite for licensure in a field. Many schools may require
these upper-level degrees for career progression through school
administration. However, these jobs do not require licensure nor is
there a specific pathway that must be followed in order to become a
school administrator.
The Department does not agree with commenters' arguments that the
NPRM (91 FR 4265) focuses too narrowly on entry into classroom teaching
and does not adequately account for school leadership, specialized
instructional support, certain administrative roles, or master's level
initial certification pathways for career changers. Because these
advanced roles are not required to enter into the profession, as
required by the first part of the operative test (91 FR 4262), these
programs are not professional degree programs for the purposes of
Direct Loan eligibility.
Changes: None.
Rehabilitation and Therapy Fields (Physical Therapy (PT/DPT), and
Occupational Therapy (OT/MSOT/OTD))
Comments: The Department received numerous comments urging it to
treat physical therapy, occupational therapy, and related
rehabilitation and therapy pathways as qualifying professional degree
programs. These commenters argued that such programs are licensed
health-professions pathways that require graduate or doctoral
education, extensive clinical training, national examinations, and
State licensure.
Some commenters who discussed physical-therapy emphasized that the
Doctor of Physical Therapy (DPT) is now the current entry-to-practice
credential for physical therapists nationwide and argued that the
Department should not rely on older, historical treatment from periods
when physical therapy was not a doctoral-entry field.
Other commenters who discussed occupational-therapy similarly
argued that, for U.S.-educated students, graduation from an accredited
MSOT or OTD program by the Accreditation Council for Occupational
Therapy Education (ACOTE) is the route to certification from the
National Board for Certification in Occupational Therapy (NBCOT) and
State licensure as an occupational therapist, and they further argued
that the NPRM misread the occupational-therapy entry pathway by
treating the Occupational Therapist Eligibility Determination (OTED)
process as though it created an alternative domestic route into the
profession.
Commenters across both fields also argued that these programs are
clinically intensive, cohort-based, and difficult to complete while
working, and that lower Federal loan limits would increase reliance on
private loans, create front-loaded funding gaps, reduce access for
lower-income and first-generation students, and worsen workforce
shortages and access-to-care problems in rural, school-based,
disability, home-health, hospital, and other underserved settings. A
subset of commenters further argued that the Department's approach is
inconsistent with the statute because DPT, MSOT, and OTD programs
satisfy what commenters described as the operative functional criteria
in 34 CFR 668.2 and are comparable to other modern health-professions
pathways that commenters view as paradigmatic professional education.
Discussion: The final rule implements Congress's cross-reference to
the existing professional-degree framework in 34 CFR 668.2 as a limited
title IV loan-limit classification rule. The Department therefore does
not accept commenters' proposed interpretation that physical therapy,
occupational therapy, and related rehabilitation and therapy pathways
must be treated as qualifying professional degree programs based on
current entry-to-practice requirements, clinical intensity, workforce
importance, or the evolution of those professions since the earlier
examples reflected in the incorporated framework were incorporated.
Commenters emphasized that the DPT is now the current entry-to-
practice credential for physical therapists nationwide and argued that
the Department therefore should not rely on earlier historical
treatment from periods when physical therapy was not a doctoral-entry
field.
The Department does not agree with that argument. The fact that the
PT profession has evolved to a doctoral-entry model establishes that
the profession's educational requirements have changed over time; it
does not establish that PT must therefore be treated as falling within
the incorporated professional-degree framework. The Department does not
treat PT as falling within the incorporated profession degree framework
solely because the profession later moved to a doctoral-entry model
tied to licensure and clinical training. That later shift in credential
level shows that entry requirements changed over time; it does not
itself alter the incorporated definition in Sec. 668.2.
In addition, many States provide for licensure for individuals who
have obtained a master's degree in physical therapy. Where there are
multiple pathways to licensure, like here, the Department finds that
the degree is not professional because that feature makes the
profession dissimilar to the features of the program in the
illustrative list of degrees in the definition of professional degree.
The Department is specifically concerned that recognizing this
shift from the master's level credential to the doctoral level
credential as a professional degree could create a moral hazard to
incentivize unnecessary degree inflation, which has been a documented
problem for many years.\11\ Since May 1, 2026,none of the degrees on
the illustrative list have a history of degree inflation, where a
lower-level degree at some point enabled the student to become
credentialed, but now only a doctoral level degree can qualify an
individual for licensure. This context is dispositive and the
Department therefore does not think the statute authorizes
classification of physical therapist programs as professional degrees.
---------------------------------------------------------------------------
\11\ See Burton Bollag, Credential Creep, Chron. of Higher Educ.
(June 22, 2007), <a href="https://www.chronicle.com/article/credential-creep/">https://www.chronicle.com/article/credential-creep/</a>.
---------------------------------------------------------------------------
This conclusion is likewise dispositive for OT. Commenters argued
that, for U.S.-educated students, graduation from an ACOTE-accredited
MSOT or OTD program is the route to NBCOT certification and State
licensure as an occupational therapist, and they
[[Page 23794]]
further argued that the NPRM misread the occupational-therapy entry
pathway by treating the OTED process as though it created an
alternative domestic route into the profession. The Department does not
accept the conclusion commenters draw from it. At most, that argument
establishes that OT is a graduate-entry licensed clinical field for
U.S.-educated students. It does not establish that OT therefore must be
treated as falling within the incorporated professional-degree
framework, nor does it require the Department to classify every field
with an accredited graduate-entry licensure pathway as substantially
similar to the illustrative examples in 34 CFR 668.2. OT therefore does
not qualify here simply because the current domestic pathway runs
through ACOTE-accredited graduate education, NBCOT certification, and
State licensure.
The Department does not treat accreditation, national board
eligibility, front-loaded tuition, or the existence of strong workforce
demand as independently sufficient to establish professional degree
status. The statute instead directs the Department to implement the
incorporated professional degree framework Congress chose to reference
for title IV loan limit purposes.
Changes: None.
Naturopathic Medicine (ND)
Comments: The Department received many comments urging it to
explicitly include the Doctor of Naturopathic Medicine (ND) as a
professional degree. These commenters argued that naturopathic medical
education is comparable in rigor and structure to other medical
pathways, and that entry to practice in regulating jurisdictions
requires graduation from a four-to-five-year Council on Naturopathic
Medical Education (CNME) accredited doctoral naturopathic medical
program, passage of the Naturopathic Physicians Licensing Examinations
(NPLEX), and State or jurisdictional licensure. Commenters repeatedly
argued that ND programs satisfy the three-part operative test: they
meet the academic requirements necessary for entry into practice;
require knowledge and clinical skill beyond the bachelor's level,
inclu
[…truncated; see source link]Indexed from Federal Register on May 1, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.