House GOP Proposes Overhaul of Student Loan Repayment Plan

WASHINGTON, D.C. — On April 28, 2025, Republicans on the House Education and Workforce Committee released a new plan that could significantly alter how Americans handle student loans. This student loan repayment plan is part of a larger budget reconciliation effort.

Committee Chair Tim Walberg, R-Michigan, stated in a press release, “Colleges have ridden this gravy train of taxpayer dollars without any accountability for the quality of the education they provide or whether students can find jobs when they graduate.” He emphasized that the proposed reforms would hold schools accountable and aim to lower costs for students and families.

The proposal suggests eliminating most existing federal loan repayment options. Instead, it would introduce two simplified plans: a fixed monthly payment based on the borrower’s total debt and an Income-Based Repayment plan called the ‘Repayment Assistance Plan.’ If the plan goes into effect, popular existing options like Income-Based Repayment and Pay As You Earn would be dismantled.

Estimates indicate this overhaul could save the federal government over $100 billion, closely aligning with earlier proposals by Representative Virginia Foxx, R-North Carolina, which the Congressional Budget Office assessed would cut spending by over $127 billion in a decade.

Preston Cooper, a senior fellow at the American Enterprise Institute, noted that the proposed changes aim to eliminate a major issue with income-driven repayment plans: negative amortization. “The payment structure would tie monthly payments to income, capping them at 10 percent,” Cooper explained. Additionally, the government would forgive unpaid interest if payments do not cover it.

The proposed legislation also aims to limit federal borrowing for education starting July 1, 2026. Under the new limits, undergraduates would be restricted to $50,000, graduate students to $100,000, and those in professional programs could borrow up to $150,000.

Furthermore, the bill plans to revise the Pell Grant program. While it would expand the program to include short-term workforce training, it would increase the eligibility requirements for being considered a full-time student, changing the criteria from 12 semester hours to 30 hours yearly.

Sameer Gadkaree, President & CEO of The Institute for College Access & Success, criticized the proposal, claiming it restricts college access and financial aid while undermining consumer protections.

Copper remarked that while the GOP may welcome fiscal savings, reforming negative amortization could significantly impact borrowers. “The new plan gives borrowers confidence that they can pay off their debts on their own,” he emphasized.

Aissa Canchola Bañez, policy director for the Student Borrower Protection Center, described the proposal as a potential attack on students and working families.

The House Education and Workforce Committee will review the House GOP Student Loan Plan soon, as part of broader efforts to identify cost savings for President Donald Trump’s tax proposal.