Draft rule would change graduate and professional loan limits, add legacy protections and allow institution-level limits

Department staff read detailed draft text proposing new annual and aggregate loan limits and transition rules. Key proposed amounts include a $20,500 annual unsubsidized limit for graduate students who are not professional students and a $50,000 annual limit for professional students beginning July 1, 2026. Aggregate and lifetime amounts were also proposed: $100,000 for some graduate borrowers and $200,000 for certain professional borrowers (adjusted for prior graduate borrowing), and a lifetime maximum aggregate limit of $257,500 for loans made under the Act excluding PLUS loans.

The draft includes a legacy exception for students who are enrolled in a program as of June 30, 2026 and who have already received a direct loan disbursement prior to July 1, 2026; such students may continue under the prior limits during their "expected time to credential." The department clarified that "received a direct loan" means a first disbursement was made and that leave-of-absence events governed by 668.22 are not treated as withdrawals for the exception.

The rulemaking package would also permit institutions, beginning July 1, 2026, to adopt consistent institutionally determined loan limits for specific programs, provided the institution documents the decision and follows record-retention and disclosure requirements. Negotiators raised concerns the definition of "professional student" and a phrase about "who is not and has never been a professional student" could permit schools to game program labels; the department explained the statutory text fixes the definition to a date certain and asked negotiators to submit proposed mandatory text by Oct. 10.

Negotiators mostly signaled conditional agreement on the package during a pulse check, with a few 'sideways' or neutral responses recorded for items requiring further clarification.