Here’s What It Means For Student Loans

House Budget Bill Passes: Here’s What It Likely Means For Student Loans

In a move that could reshape federal fiscal policy for the next decade, Republicans just passed a sweeping House budget bill that sets the stage for dramatic spending cuts—including a recalibration of student loan programs. This isn’t your run-of-the-mill budget resolution; it’s the blueprint for President Donald Trump’s legislative agenda and includes top-line savings targets that House committees must hit. In this process, reconciliation has emerged as a powerful tool, locking in numbers that will be nearly impossible to change once set in stone.

Why The House Budget Bill Is Critical This Year

Most years, congressional budgets are incidental, often passing without a vote; however, this year the House budget bill is different because Republicans are pushing through their sweeping agenda via reconciliation, a special process that sidesteps Senate filibusters. Using the reconciliation process has turned the budget into a critical policy instrument. The new 10-year budget doesn’t prescribe specific spending cuts; instead, it lays out top-line instructions for various House committees, mandating at least $1.5 trillion in cuts to required spending over the next decade. A last-minute amendment, aimed at appeasing fiscal hawks concerned about the national debt, ups that figure to $2 trillion—either through additional cuts or by reducing tax cuts.

The text of the 10-year budget provides instructions for various House committees related to tax and spending cuts but doesn’t require that those committees hit their numbers in a particular way. The Education and Workforce division is under immense pressure to generate substantial savings for student loans. The bill calls for a $330 billion cut in Education and Workforce spending over the next decade—a target that seems designed to force drastic changes, including in federal student loan programs, given that the overall expenditure overseen by the committee is $722 billion (note: a substantial portion of this spend focuses on areas such as child nutrition)

House Budget Bill Likely Necessitates Drastic Cuts To Student Loan Programs

A key component of these mandated savings will likely be the potential elimination of the SAVE plan—the student loan repayment program introduced by the Biden administration. According to a 50-page House document released a few weeks ago, ending SAVE could contribute savings of as much as $127 billion over 10 years (The New York Times pegs the savings even higher, at $150 billion depending on “depending on the status of the litigation [legal challenges from states related to SAVE]

).

In theory, if the Education and Workforce committee is to meet its $330 billion target, scrapping SAVE won’t be just a fiscal or policy preference; it will be a necessary step. Without it, even the most aggressive spending cuts in other areas might fall short of the savings required. This creates a high-stakes environment where every dollar of alleged waste must be identified, verified, and cut, no matter how politically sensitive the student loan programs have become.

Other Student Loan Related Options That The House Budget Bill May Require

While the proposed elimination of SAVE is one of the most significant potential savings, the House budget bill will likely require several other avenues to generate revenue related to student loans. These are outlined in the 50-page House list and include:

• Reforming Public Service Loan Forgiveness: The House proposal suggests limiting eligibility for the program, among other potential reforms.
• Repealing Biden Borrower Defense To Repayment Discharge Regulations: “This option would partially repeal a Biden administration rule that made it easier for a borrower to discharge loans as a result of a school’s misconduct, including, for example, misrepresentation of student outcomes,” the House document states.
• Reforming Pell Grants: This could include capping grants at the median cost of attendance, which would lower critical aid to students.
• Sunsetting Grad And Parent Plus Loans: The House list proposes eliminating parent PLUS and grad PLUS loans by 2028.

What’s Next For Student Loans After House Budget Bill Passed

While the House budget bill has set aggressive targets, the process is far from over. Republicans in the Senate will also need to adopt it and Senators have articulated a somewhat different path to tackle President Trump’s priorities. “Senate Republicans have passed a budget outline for a narrow bill focused on border enforcement and defense, hoping to take a more ambitious swing at tax policy in a separate bill later this year,” reported The New York Times.

The Upshot For Student Loans From The House Budget Bill

The implications of the House Budget bill passing will likely be profound for millions of student loan borrowers. The potential elimination of SAVE, as well as other loan repayment and forgiveness programs, could fundamentally alter how student debt is managed, with higher monthly payments and less generous forgiveness options. While saving $150 billion sounds impressive on paper, the reality is that current student loan forgiveness programs are deeply embedded in the fabric of federal student aid. Removing them, along with other cost-saving measures, could lead to a significant restructuring of the entire student loan landscape.

The House budget bill has set the stage for a dramatic recalibration of federal spending priorities. In this era of aggressive fiscal cuts, one thing is clear: Every dollar of savings counts, and for those reliant on federal student loans, the coming years may hold significant, if not unwelcome, changes.