A new GOP bill would slash student loan programs, change Pell Grant eligibility and loosen regulations on for-profit colleges. That is, if it survives Congress’s budget rules.
GOP could raise student loan bills to pay for Trump’s tax cuts
Millions of student loan borrowers could be stuck paying more as GOP lawmakers considering ending repayment plans to fund Trump’s tax cuts.
Straight Arrow News
WASHINGTON – Republicans in Congress are moving forward with a massive plan to overhaul how Americans pay for college. And they’re hoping to make an end-run around Senate Democrats to do it.
On Monday, a GOP-led committee in the U.S. House of Representatives unveiled a sprawling, 100-page budget bill that would reshape much of the college financial aid system. If enacted, the legislation would touch the lives of millions of students and the colleges they attend.
It would reduce undergraduate students’ eligibility for traditional Pell Grants and penalize some universities for saddling students with crushing debt. Costs for certain college programs would be capped. At the same time, regulations on for-profit colleges would loosen.
It would also give student loan borrowers less flexibility in their monthly bills – which for many would go up.
The bill would save hundreds of billions of dollars and pave the way for broader tax cuts, said Rep. Tim Walberg, a Michigan Republican who chairs the Education and Workforce Committee in the House.
“Bottom line, it’s time to fix this broken cycle that is costly to taxpayers and leaves students worse off than if they never went to college,” he said in a statement Monday.
Critics argue the legislation would make it harder for students – especially those from low-income backgrounds – to get to college, graduate and pay back their debts. Students, including those at community colleges whose jobs and families could prevent them from meeting new courseload requirements, would see their Pell Grants disappear.
“Instead of bringing down the cost of college, House Republicans want to punish millions of borrowers desperately trying to repay their debts, pushing them further into the red while allowing some of the most predatory actors in higher ed to profiteer at their expense,” Aissa Canchola Bañez, the policy director at the Student Borrower Protection Center, a progressive borrower advocacy group, said in a statement Monday.
Pell Grants: What would change?
The bill, which Republicans have dubbed the “Student Success and Taxpayer Savings Plan,” would stave off a looming shortfall in funding for Pell Grants: federal scholarships that help lower-income students pay for college. Nearly 7 million students rely on them each year.
The legislation would also alter Pell eligibility in a few key ways, namely by raising the number of hours students need to study each term to qualify.
Those changes would “absolutely wallop community colleges in particular,” said Bryce McKibben, the senior director of policy and advocacy at The Hope Center for Student Basic Needs. Community college students often have more responsibilities, such as jobs and kids, than traditional undergraduates. That dynamic can prevent them from enrolling in more classes.
“The bill is a real threat to college affordability and student basic needs,” he said.
Meanwhile, students enrolled in some weekslong programs, including training schools for cosmetologists and welders, would qualify for “workforce Pell Grants” for the first time.
What about student loans?
The legislation proposes a massive restructuring of the federal student loan system. Under the proposal, the number of repayment plans would shrink from roughly a dozen to just two.
One of those programs would replace former President Joe Biden’s signature student loan repayment plan, which he called Saving on a Valuable Education, or SAVE. Though Biden’s Education Department called it the “most affordable repayment plan ever,” conservatives felt the program unfairly brought many borrowers’ monthly bills to $0, effectively forgiving their debt. SAVE has been tied up in court for months, leaving millions of borrowers in forbearance until at least September.
Under the GOP’s repayment proposal, which Republicans are calling the Repayment Assistance Plan, monthly bills would be higher compared to Biden’s plan. But the program would fix a longstanding problem by making sure a borrower’s balance never goes up if they make their monthly payments, according to Preston Cooper, a higher education expert and senior fellow at the conservative American Enterprise Institute.
“That’s really contributed to a lot of the anger about student loans,” he said. “The new repayment plan really is earth-shaking.”
If the bill becomes law, some types of loan applications would disappear. On the chopping block would be new direct subsidized loans for undergrads (which don’t earn interest while students are in school), grad PLUS loans and parent PLUS loans.
Another component of the bill would fine some colleges for saddling students with debt they can’t pay back. The idea has been floating around the halls of Congress for years but has met substantial opposition from universities.
“It’s not meant to ruin these colleges financially,” Cooper said. “But it is something that they’re going to notice.”
Education Department layoffs, budget rules pose problems
Despite Republicans’ dominance of Washington politics, there are quite a few barriers to the bill becoming law.
In order to bypass the Democrats and the 60-vote threshold in the U.S. Senate, the GOP is trying to pass the legislation through a special process called reconciliation. That strategy only works if the bill is mostly a budgetary measure. If it’s too ambitious, the “parliamentarian,” a nonpartisan rule-keeper in Congress, can kill it.
Some opponents think that’s a likely scenario. Sameer Gadkaree, the president of the Institute for College Access & Success, a left-leaning college affordability group, said Monday the bill is “far outside of the scope of the budget reconciliation process.”
It’s also not clear to onlookers like Jill Desjean, a senior policy analyst at the National Association of Student Financial Aid Administrators, whether the downsized U.S. Department of Education even has the staff to implement the changes laid out in the legislation. Through layoffs and buyouts, the Trump administration has cut the agency’s workforce in half. Those departures have already hampered federal programs, causing issues for students and colleges.
“We definitely haven’t seen the full fallout of how much work just can’t be done anymore,” Desjean said.
McKibben, the student needs advocate, agreed.
“They do not have anywhere near the capacity that’s needed to administer what is proposed in this bill, which is a wholesale restructuring of our student loan repayment system,” he said.
A federal judge could rule this week on a preliminary injunction to potentially reinstate hundreds of Education Department workers. On Tuesday morning, a congressional committee is slated to debate the Student Success and Taxpayer Savings Plan.
Zachary Schermele is an education reporter for USA TODAY. You can reach him by email at [email protected]. Follow him on X at @ZachSchermele and Bluesky at @zachschermele.bsky.social.