Student Loan Borrowers Would Have 30 Years Of Debt Under New GOP Plan That Guts Loan Forgiveness

House Republicans unveiled a long-awaited legislative proposal on Monday to overhaul the federal student loan system. If enacted, the bill would make profound changes to federal aid and student loan repayment plans, and would cut off or push out student loan forgiveness for millions of borrowers.

The release of legislative text is the next step in a lengthy process called reconciliation, whereby GOP leaders hope to be able to make significant changes to government spending and taxation through a budget process that allows legislation to pass Congress with simple majorities in the House and the Senate. This would allow Republicans to bypass a likely Democratic filibuster in the Senate. Republicans want to extend and expand significant tax cuts, and offset the costs of those cuts (which may run into the trillions of dollars) by slashing government spending.

“For decades Congress has responded to the student loan crisis by throwing more and more taxpayer dollars at the problem—never addressing the root causes of skyrocketing college costs,” said Education and Workforce Committee Chairman Tim Walberg (R-MI) in a statement on Monday. “This plan brings accountability and holds schools financially responsible for loading students up with debt. The bill also includes other reforms that will lower costs for students and families while ensuring the fiscal sustainability of targeted programs like the Pell Grant.”

But the legislation, if enacted, could trap borrowers in debt for three decades or longer, while cutting off opportunities for discharge and student loan forgiveness. Here’s a breakdown.

Reconciliation Bill Would Limit Student Loan Forgiveness Opportunities

The GOP proposal incorporates several earlier plans contained in the College Cost Reduction Act, which was filed by Republican lawmakers last year. These include the repeal of Biden-era rules governing two student loan forgiveness programs – Closed School Discharges, and Borrower Defense to Repayment. Both programs allow borrowers to request a discharge based on certain kinds of school conduct, such as shutting down while a borrower is enrolled or misleading prospective students into enrolling based on false promises or misrepresentations about job prospects or admissions selectivity. The Biden-era rules were intended to broaden eligibility criteria for these programs and make it easier for borrowers to qualify for relief. The reconciliation proposal would repeal those rules.

The GOP bill would also remove Public Service Loan Forgiveness eligibility for medical residents. In addition, the legislation would limit the ability of the Department of Education to enact new rules and regulations that offer new student loan forgiveness pathways to borrowers.

“The Secretary of Education may not implement any rule, regulation, policy, or executive action specified in this section (or a substantially similar rule, regulation, policy, or executive action) unless authority for such implementation is explicitly provided in an Act 15 of Congress,” reads the legislative text. This is likely a direct response to former President Biden’s effort to enact mass student loan relief.

The reconciliation bill would also sunset the Graduate PLUS and Parent PLUS programs. Advocacy groups have warned that this could force families to rely more on private student loans to pay for the costs of higher education. Private student loans generally have fewer repayment options and less robust consumer protections, and don’t qualify for student loan forgiveness.

GOP Plan Would Keep Many Borrowers In Debt For 30 Years And Push Out Student Loan Forgiveness

One of the more significant changes proposed in the reconciliation bill is a complete restructuring of income-driven repayment plans. IDR plans offer borrowers affordable monthly payments based on a formula applied to their income and family size. Payments are recalculated annually. Historically, borrowers would be entitled to student loan forgiveness for any remaining balance after 20 or 25 years, depending on the plan. Increasingly, borrowers have been relying on IDR plans as the cost associated with more traditional fixed plans have become prohibitively high relative to income.

Currently, there are four IDR plans. The Income-Contingent Repayment plan, or ICR, is the oldest and most expensive. The statute authorizing ICR also led to the creation of the Pay As You Earn, or PAYE, plan, and most recently, the SAVE plan that was established under former President Biden. SAVE is currently blocked due to a legal challenge and appears likely to ultimately get struck down.

The Republican proposal in the reconciliation bill would eliminate all four of these IDR plans and replaced them with a new plan called the “Repayment Assistance Program.” This new IDR program would utilize a repayment formula comparable to the more expensive current IDR options (but less affordable than the SAVE plan). However, the Repayment Assistance Program would fundamentally change how student loan forgiveness operates. Borrowers would only qualify for debt relief after making 360 on-time monthly payments – the equivalent of 30 years. And once enrolled in this plan, most borrowers would be locked in, according to the legislative text.

This is far longer than the 20- and 25-year repayment terms that exist for current IDR plans, although a prior version of the proposed legislation would have eliminated time-based student loan forgiveness altogether, effectively trapping some borrowers in a lifetime of debt. Parent PLUS borrowers would not qualify for the new IDR program at all, effectively cutting off income-based payments and student loan forgiveness altogether for these borrowers.

The changes to IDR would primarily only impact borrowers who take out new student loans on or after July 1, 2026. That means current borrowers repaying their student loans under existing IDR plans may be able to maintain access to these programs – in particular, to the IBR plan. However, the reconciliation bill takes significant steps to minimize the availability of the ICR and PAYE plans, as well as a newer, more affordable version of IBR for borrowers who first took out student loans after July 1, 2014. Separately, the Department of Education is initiating a rulemaking process this week that may further alter or curtail access to those programs. This could mean that most current student loan borrowers may only be able to enroll in the older version of the IBR plan if they want to eventually receive student loan forgiveness in less than 30 years.

Advocates Slam GOP Proposal To Limit Federal Aid, Extend Repayment, And Curtail Student Loan Forgiveness

Student loan borrower advocacy groups were critical of the GOP proposals.

“The committee’s current proposal would severely restrict college access by slashing financial aid programs, eliminating basic consumer protections, and making it harder to repay student loan debt,” said Sameer Gadkaree, President & CEO of The Institute for College Access & Success in a statement on Monday. “Rather than hurting tens of millions of students to fund tax cuts for the wealthy few, American families need Congress to make college more affordable and accessible.”

“This bill is a grossly failed attempt to provide a solution to the higher education crisis,” said Braxton Brewington, spokesperson for the Debt Collective, a national debtors union that advocates for student loan borrowers. “In a nutshell, this bill says that only the wealthy few can attend college, and that working class students will receive no help from the federal government to learn or pursue a career.”

Republican lawmakers must go through several more steps for any of the proposed changes to student loan forgiveness, repayment, and aid programs to go into effect. GOP leaders hope the House and Senate can pass the bill by this summer.