Advocacy groups and policy experts expressed concern that the tightened regulations could spike defaults and prevent students from completing advanced degrees.
Conversely, education officials argued the measures will protect taxpayers and force universities to lower tuition costs.
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"This may end up being a bit of an overcorrection," said Clare McCann, the policy director at the Postsecondary Education & Economics Research (PEER) Center.
"We could see implications for student access."
Department officials maintained that the caps are necessary to curb excessive borrowing across the higher education system.
"Affordability is the name of the game right now," said Nicholas Kent, Department of Education Under Secretary.
"These loan caps will put downward pressure on institutions to lower their costs. We've got to get the cost of higher education down in this country."
Kent also stressed that borrowers must take personal accountability for their financial obligations under the updated federal framework.
"[Borrowers] have a responsibility as somebody who took out a loan to repay it," said Kent.
"It's not your neighbor's job to repay your loan, it's your job to repay your loan, but there are tools available to help you."
Existing loan plans like the Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) options will remain available for current borrowers until they are officially eliminated in July 2028.
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Additionally, the Department of Education is offering a one percentage-point interest rate discount through June 30, 2028, for borrowers who enroll in automatic payments by September 30.
