Student loans under attack: controversial Republican plan already causing outrage

The Republican-controlled House passed a budget resolution in February to extend provisions of President Trump’s 2017 tax cuts, which heavily favored wealthy taxpayers, and add further tax cuts. In total, GOP lawmakers authorized slashing federal revenue by $4.5 trillion through 2034 that will have to be offset by $2 trillion in cuts to government spending.

If approved, at least $350 billion could come from cuts to federal student loan and financial aid programs according to a plan unveiled by Republicans on the House Education and Workforce Committee. The Student Success and Taxpayer Savings Plan would reduce the number of repayment options available, limit the amount students can borrow and force universities to repay a portion that borrowers fail to pay back.

Ostensibly, in addition to provide tax relief, Republicans say that the changes are meant to “rein in wasteful spending, and reduce the federal budget deficit.” Education and Workforce Committee Chairman Tim Walberg said in a statement that proposal would “bring much-needed reform in three key areas: simplified loan repayment, streamlined student loan options, and accountability for students and taxpayers.”

Federal student loan caps

Currently, students are limited on the amount that they can borrow by various factors including their status and year of schooling. But in general the new thresholds will mean students can borrow less through federal loan programs after 1 July 2026. This will mean that those who exceed the “aggregate limits” limits will have to take out private student loans, which have fewer protections, a concern for customer advocates.

The borrowing aggregate limits proposed are as follows:

Undergraduates: $50,000
Graduate students: $100,000
Professional programs: $150,000

These limits are based on “the median cost of attendance for students enrolled in the same program of study nationally,” according to the text of the Republican legislation.

The plan would also cap Parent Plus loans at $50,000 and require students to borrow the maximum amount they can before their parents can take out loans on their behalf. It also sunsets GradPlus loans that allowed for uncapped lending.

Fewer student loan repayment options

Besides the standard repayment plans, there are currently four main income-driven repayment (IDR) plans listed on the Student Aid webpage. These include Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE).

Mr. President, we just did our part to pass the BIG, BEAUTIFUL bill and cut wasteful government spending.

The Student Success and Taxpayer Savings Plan will help lower college costs and put money back in the pockets of taxpayers. That’s how we deliver for the American people! pic.twitter.com/PliuWgprwz

— House Committee on Education & Workforce (@EdWorkforceCmte) April 29, 2025

After 1 July 2026, under the Republican proposal, those who take out federal student loans will only have two options, a ‘Standard Repayment Plan’ and a ‘Repayment Assistance Plan’. The former would have fixed payments over 10 to 25 years while the latter would base monthly payments on a borrower’s total adjusted gross income.

The maximum number of payments that need to be made under the new Repayment Assistance Plan before a borrower qualifies for loan forgiveness will increase from 20 or 25 years to after 360 qualifying payments, or 30 years, have been made.

But the plan also provides an interest subsidy for those that pay on-time, whereby “the amount of interest accrued and not paid for the month shall not be charged to the borrower.”

Changes to Pell Grants

The Pell Grant program for low-income students would also get a makeover under the proposed GOP plan. In order to receive the maximum Pell amount a student must be enrolled full-time, which would rise to 30-credit hours per year, up from 12. Students will be required to be enrolled at least half-time, or 15 credit hours per year in order to qualify for any Pell Grant award.

While this changes would help reduce the amount of time needed to complete a degree, the National College Attainment Network warns that it would result in significant cut in aid for roughly a quarter of Pell recipients. Additionally, it would force millions to take on too heavy a course load due to work or caregiving obligations, as well as those adjusting to college in their first semester.