Here’s what could happen.
Under the budget proposals currently being discussed by House Republicans, student loan borrowers may see their payments rise significantly, signaling a stark departure from recent years of working with the Biden administration on reducing payments and providing debt relief. This shift marks the end of student loan forgiveness, and borrowers are now bracing for potential changes that could significantly impact their financial situations.
While the specifics of the GOP proposals may still evolve, the trend seems clear: the era of debt relief is coming to an end. Instead of a continuation of forgiving loans or reducing payment amounts, Republican lawmakers are focusing on tightening the repayment system. As a result, student borrowers, especially those from working families, are facing the possibility of much higher monthly payments.
A key provision in the proposed budget is the elimination of the Biden-era Saving on Valuable Education (SAVE) plan, which allowed some borrowers to reduce their payments to $0. This change, coupled with plans to streamline income-driven repayment (IDR) options, would significantly impact those with loans taken out after June 30, 2023. The GOP estimates that these changes could save taxpayers over $127 billion in the next decade, but at the cost of raising monthly payments for many borrowers by almost $200, according to a study by The Institute for College Access & Success.
This move is part of a broader effort by House Republicans to push forward their agenda, which includes major spending cuts. Speaker Mike Johnson and other GOP leaders are working to pass a budget resolution while maintaining party unity, despite some divisions over issues like Medicaid and tax cuts.
On top of repayment changes, Republicans are also seeking to curb the authority of the Department of Education, preventing the agency from making large-scale student loan forgiveness decisions without Congress’s approval. Conservatives, who have long opposed President Biden’s student debt relief plans, argue that such decisions should be made through legislation and the democratic process, not unilateral executive action.
While proposals like Public Service Loan Forgiveness (PSLF) have enjoyed bipartisan support in the past, Republicans are now pushing for reforms to limit eligibility. They’re also considering various other measures, such as capping the amount students can borrow, limiting loan discharge options, and overhauling Pell Grants.
Despite the uncertainty, student loan advocates are urging borrowers to keep track of their payment progress and to consider enrolling in programs that may be more secure in the long run. As these legislative discussions continue, it’s clear that Republicans are focused on curbing government spending, even if that means toughening the terms for student loan borrowers. For those affected, now is the time to stay informed and involved in the debate.