WASHINGTON — Students and families could see significant changes to how student loans are repaid as well as cuts to federal student aid as congressional Republicans look to slash billions of dollars in federal spending to offset the cost of President Donald Trump’s sweeping agenda.
Republicans are using the complex reconciliation process to move a package through Congress with simple majority votes in each chamber, avoiding the Senate’s 60-vote threshold that generally requires bipartisanship.
The House Committee on Education and Workforce approved its portion of the package in a party-line vote in April, pushing GOP lawmakers a step closer to potentially securing key changes to student loan repayment options and Pell Grant eligibility.
Chairman Tim Walberg, a Michigan Republican, said the 103-page bill would save taxpayers more than $350 billion over 10 years and “bring much-needed reform” on “simplified loan repayment, streamlined student loan options, and accountability for students and taxpayers.”
But the bill has drawn criticism and worry from student advocates and congressional Democrats over how the proposed changes would impact higher education affordability and access.
Aissa Canchola Bañez, policy director at the Student Borrower Protection Center, told States Newsroom that the advocacy group was “really troubled to see House Republicans take such a drastic approach to their efforts to address the college affordability crisis.”
“Unfortunately, this bill will make college more expensive for families and students and will make it significantly more risky for students and families just trying to pay for college, and it’s also going to make student loan debt significantly more expensive for millions of borrowers across the country,” she said.
Rep. Bobby Scott, ranking member of the committee, echoed the concerns of student advocacy groups.
The Virginia Democrat said the bill would “increase costs for colleges and students,” “limit students’ access to quality programs” and take “all the so-called ‘savings’ to pay for more tax cuts for the wealthy and the well-connected.”
Here’s a breakdown of some of the major changes outlined in the House education panel’s portion of the package:
The bill would repeal subsidized loans — where the federal government pays the interest on the loan while a borrower is in school — for borrowers beginning July 1, 2026, according to the committee’s summary.
For unsubsidized loans disbursed on or after July 1, 2026, the maximum annual loan limit would be amended to the “median cost of students’ program of study.”
The total amount of federal student aid a person could receive annually would also be capped at the “median cost of college.” According to the committee, this is defined as “the median cost of attendance for students enrolled in the same program of study nationally and calculated by the (Education) Secretary using data from the previous award year.”
Aggregate limits, or the maximum amount a student can borrow, would cap at $50,000 for undergraduate programs; $100,000 for graduate programs; and $150,000 for professional programs, such as law or medical school.
The bill also repeals the Grad PLUS program and places new restrictions on Parent PLUS loans.
Undergraduate students would be required to “exhaust their unsubsidized loans before parents can utilize Parent PLUS to cover their remaining cost of attendance,” according to the panel’s summary.
Canchola Bañez noted that the repeal of the Grad PLUS program would increase the likelihood that students would have to take out loans in the private market to fill gaps they would have normally filled by using Grad PLUS loans.
“We know that private loans have much less protections and consumer protections for borrowers,” she said, adding that “the more we push folks out of the federal market and into the private market, the less students and borrowers have access to those protections should things go wrong after school.”
‘Skin-in-the-game accountability’
The package also proposes “skin-in-the-game accountability” for colleges and universities, and institutions would have to pay the federal government “a percentage of the non-repayment balance associated with loans disbursed on or after July 1, 2027,” according to the panel’s summary.
Preston Cooper, senior fellow in higher education policy at a right-leaning think tank, the American Enterprise Institute, said “essentially, for colleges whose borrowers require some of this repayment assistance, if their payments are too low to cover interest on their loans, or they require that principal credit, the colleges will have to cover a share of the costs.”
“They won’t have to cover all the costs — the government will pay some of it — but they will have to cover some of the cost of providing borrowers with that repayment assistance, and I think the idea here is to create better incentives for colleges to make sure that they’re not loading students up with unnecessary debt,” he said.
Pell Grant eligibility
The bill redefines full-time enrollment for Pell Grants — a federal government subsidy that helps low-income students pay for college.
The legislation raises the minimum number of credit hours to qualify for the maximum Pell Grant award from 12 credit hours per semester to 15 credit hours. Students would also be ineligible for a Pell Grant if their Student Aid Index — a formula-based number to determine financial aid eligibility — equals or surpasses twice the amount of the maximum Pell Grant.
Pell Grant eligibility would also be expanded for those in short-term programs between eight and 15 weeks long.
Repealing the SAVE plan
The bill creates just two repayment plans — a Standard Repayment Plan and a Repayment Assistance Plan, while eliminating the Biden administration’s Saving on a Valuable Education, or SAVE, plan, which is currently tied up in federal court.
The Standard Repayment Plan includes fixed monthly payments and repayment terms between 10 to 25 years depending on how much one borrows, per the committee, while the Repayment Assistance Plan calculates payments based on a borrower’s total adjusted gross income.
The Repayment Assistance Plan also includes a minimum $10 monthly payment and “offers balance assistance to borrowers making their required on-time payments by waiving unpaid interest and providing a matching payment-to-principal of up to $50,” according to the panel.
Cooper said the Repayment Assistance Plan “fixes one of the long-standing problems in the income-driven repayment system for student loans, which is that a lot of borrowers’ payments don’t cover their accrued interest, which means that they see their balances rise over time.”
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