What Financial Aid Pros Need to Know About the RISE Proposed Rules
Colleagues in the Title IV community, the ground is shifting beneath your feet. The proposed regulations from the recent Reimagining and Improving Student Education (RISE) Negotiated Rulemaking Session 2 signal a monumental transformation in how federal loans are awarded and managed. The most significant changes are set to take effect on or after July 1, 2026, and July 1, 2027.
Here are the critical takeaways that require immediate attention to ensure compliance and proper student guidance.
1. The Grad PLUS Loan is Sunset (Mostly) on July 1, 2026
The era of uncapped borrowing for graduate and professional students is nearing its end. Starting July 1, 2026, new graduate or professional students may not borrow a Direct PLUS Loan.
Action Item: We must clearly identify and communicate a "grandfathering" clause to current students. If a student was enrolled in a program at an institution as of June 30, 2026, and a Direct Loan was made for that program prior to July 1, 2026, the limitation doesn't apply during the student's expected time to credential.
New Limits: Get ready to process loans under the new annual caps for Direct Unsubsidized Loans: $20,500 for graduate students who are not professional students and $50,000 for professional students.
2. The Repayment Assistance Plan (RAP): Your New IDR Centerpiece
The Repayment Assistance Plan (RAP) is the primary income-driven repayment (IDR) option for Direct Loans made on or after July 1, 2026. It is the replacement for most prior IDR options for new borrowers.
RAP at a Glance for Financial Aid Staff:
Eligibility & Exclusion: Direct Subsidized, Unsubsidized, and PLUS Loans (student-borrowers), and Direct Consolidation Loans that are not "excepted consolidation loans" are eligible. Crucially, Parent PLUS loans and consolidation loans that repaid them are excluded from RAP.
Payment Calculation §685.2099f)(5)
It uses a tiered percentage of AGI (Adjusted Gross Income) as the "Base Payment," ranging from 1% to 10%.
The monthly payment is: (Base Payment / 12) minus $50 for each dependent.
Minimum Payment: The minimum monthly payment will be $10. This means the familiar $0 payment is eliminated under RAP.
Interest & Principal Protections: Unpaid accrued interest is not charged to the borrower's account. Furthermore, if the payment does not reduce the principal by at least $50, the Secretary provides a "Matching Principal Payment" to cover the difference (up to $50).
Loan Forgiveness: Any remaining balance is forgiven after 360 monthly payments or the equivalent (approximately 30 years). Payments count toward Public Service Loan Forgiveness (PSLF).
3. Simpler (But Stricter) Repayment Landscape
For new loans starting July 1, 2026, borrowers choose between the Tiered Standard repayment plan or the Repayment Assistance Plan (RAP).
New Default Plan: If a borrower with loans made on or after July 1, 2026, does not select a repayment plan, the Secretary designates the Tiered Standard repayment plan §(685.208(c)(1)) for them.
Existing IDR Borrowers (Loans before 7/1/26): Through June 30, 2028, Direct Loan borrowers may continue to repay under REPAYE, PAYE, or ICR. After that date, they must transition to an eligible plan, such as the existing IBR plan or the new RAP.
4. Loan Servicing Changes: Rehabilitation, Deferments, and Forbearance
These changes introduce stricter limits on certain relief options:
Loan Rehabilitation: On or after July 1, 2027, a borrower may rehabilitate a defaulted loan a maximum of two times.
Wage Garnishment Suspension: The benefit of suspending administrative wage garnishment while rehabilitating a defaulted loan is limited to a maximum of twice per loan on or after July 1, 2027.
Waning Deferment Options: For loans disbursed on or after July 1, 2027, a borrower may not receive an unemployment deferment or an economic hardship deferment.
Forbearance Cap: For loans disbursed on or after July 1, 2027, the Secretary grants forbearance for a period that does not exceed nine months within a 24-month period for general forbearances (§ 685.205(a)(1)).
Call to Action: Compliance is Key
These new rules will require a monumental effort in systems update, staff training, and borrower communication. We need to be fully prepared for two implementation years: July 1, 2026, for the loan limits and new repayment structure, and July 1, 2027, for the changes to loan servicing and default remedies. The clock is ticking. Now is the time to start auditing your systems for compliance with the new limits and creating clear, concise communication strategies for your current and prospective students.
To navigate this complex regulatory terrain and ensure your institution maintains seamless compliance and optimal student service, turn to jhsgllc.com. Our services are specifically designed for the Title IV industry, offering expert guidance in compliance audits, policy and procedure development, and operational best practices. Let our team assist you in implementing these extensive new changes so you can focus on your students and their education.
