Republican lawmakers have unveiled a proposal to dramatically reshape the federal student loan system, aiming to overhaul how millions of Americans repay their education debt.
The plan, introduced Monday by the House Committee on Education and the Workforce, outlines the elimination of several widely-used income-driven repayment programs and introduces stricter conditions for access to federal grants and loans.
According to a report by CBS News, the sweeping proposal could result in higher monthly payments for many borrowers while significantly reducing access to existing relief options. If enacted, the changes would mark one of the most substantial federal student loan reforms in recent decades.
Broad Restructuring of Repayment Plans
The centerpiece of the proposal is the replacement of the current four income-driven repayment plans, including the Saving on a Valuable Education (SAVE) plan, with a new “repayment assistance plan”. The proposed system would tie monthly payments to a borrower’s adjusted gross income, ranging from 1% to 10%, and extend the repayment period to a maximum of 30 years.
The SAVE plan, introduced by the Biden administration in 2023, allowed borrowers to qualify for loan forgiveness after as few as 10 years. More than 8 million borrowers had enrolled before the program was paused by court order, following a lawsuit filed by several Republican-led states citing concerns about lost revenue.
President Biden had called SAVE “the most affordable student loan plan ever”, reflecting its goal of easing the burden of educational debt.
Mike Pierce, executive director of the Student Borrower Protection Center, sharply criticized the GOP proposal in a letter dated April 28:
Based on our review of this proposal, contrasted with the benefits and protections available to borrowers under the Saving on a Valuable Education (SAVE) repayment plan, we found that a typical borrower will see monthly student loan costs spike by hundreds of dollars per month, or thousands of dollars per year.
Fixed Repayment Plans and Loan Terms
The Republican bill introduces a standard repayment plan that offers fixed monthly payments over time. Borrowers with less than $25,000 in debt would have 10 years to repay, while those with $25,000 to $50,000 would be given 15 years. This effort aims to streamline the repayment structure for student loans, though critics argue it offers less flexibility than current IDR plans.
Impact on Pell Grants and Loan Types
The proposal tightens eligibility for Pell Grants, requiring students to carry at least 15 credit hours per semester (up from 12) to qualify as full-time. Additionally, half-time students would no longer be eligible, and stricter asset evaluations could prevent some low-income families from receiving aid.
Republicans also propose eliminating subsidized loans for undergraduates and Grad PLUS loans for graduate and professional students. Under current terms, subsidized loans shield students from accruing interest while in school. These changes could substantially shift the cost burden back onto students and families.
Caps and Restrictions on Family Borrowing
The plan mandates that undergraduate students must borrow the maximum amount available — raised to $50,000 from the current $31,000 — before parents can access Parent PLUS loans. These loans, currently based on the full cost of attendance minus aid, would be capped at $50,000.
This shift is expected to reduce reliance on parental borrowing but could limit families’ flexibility in covering total education expenses.
Fiscal and Political Backdrop
According to Committee Chairman Tim Walberg (R-MI), the proposal is part of a broader GOP effort to reduce federal spending while passing legislation to extend Trump’s 2017 tax cuts and eliminate taxes on tipped income. He stated the goal is:
Addressing the root causes of skyrocketing college costs.
Estimates suggest the proposed overhaul would save the federal government more than $330 billion.
