US President Donald Trump speaks during the National Prayer Breakfast at the US Capitol in Washington, DC, on February 6, 2025.
Mandel Ngan | Afp | Getty Images
As House Republicans look for ways to slash spending to fund President Donald Trump’s tax cuts, they’ve floated proposals that could raise federal student loan bills for millions of borrowers.
GOP lawmakers are expected to use the budget reconciliation process to make major cuts to the federal budget. The savings from the student repayment plan overhaul would be $127.3 billion over 10 years, according to their estimate.
The timing is uncertain on when any of these changes could surface. It’s also possible that the final Republican plan will be different than those proposed.
But the average student loan borrower could pay nearly $200 a month more if the GOP plans to reshape the repayment program succeed, according to an early estimate by The Institute for College Access & Success.
“Most people don’t have an extra $200 a month to throw toward their student loan bill,” said Michele Shepard Zampini, senior director of college affordability at The Institute.
Under the Republican-backed plans, the average borrower could see their monthly bill swell to $288 from $95, TICAS calculated. Researchers at TICAS estimated the monthly bill from repayment terms floated under current and former GOP-backed proposals. They compared those bills to what borrowers would pay under the Biden administration’s new income-driven repayment option, known as the Saving on a Valuable Education plan, or SAVE.
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The changes to the student loan system would likely only apply to new borrowers, said higher education expert Mark Kantrowitz.
If GOP lawmakers mirror the repayment terms in the legislation introduced by Rep. Virginia Foxx, R-N.C., and supported by many House Republicans last year, the College Cost Reduction Act, the typical student loan borrower with an associate degree could pay around 50% more over time than they would under SAVE, a new report by the Center for American Progress noted. Graduate students, however, could pay between 10% and 15% less than on SAVE.
“Paying for tax cuts for corporations and the wealthy on the backs of student loan borrowers who are already struggling would be deeply unfair and harmful to millions of Americans,” said Sara Partridge, associate director of higher education policy at the Center for American Progress.
A reversal from SAVE plan
Republicans have expressed interest in narrowing the number of income-driven repayment (IDR) plans for student loan borrowers to just one. Congress created IDR plans in the 1990s to make borrowers’ bills more affordable. The plans cap people’s monthly payments at a share of their income, and cancel any remaining debt after a certain period, typically 20 years or 25 years.
More than 12 million people were enrolled in the plans as of September 2024, according to Kantrowitz.
Former President Joe Biden’s SAVE plan, which is currently tied up in legal challenges, had the most generous terms of any IDR plan to date.
It cut many borrowers’ bills in half and offered expedited loan forgiveness to those with smaller balances. SAVE could cost as much as $475 billion over a decade, an analysis by Pennsylvania’s Penn Wharton Budget Model found.
That made it a target for Republicans, who argued that taxpayers shouldn’t be asked to subsidize the loan payments of those who’ve benefited from a higher education, experts explained. Critics also accused Biden of trying, with SAVE, to find a roundabout way to forgive student debt after the U.S. Supreme Court ruled in June 2023 that his sweeping debt cancellation plan was unconstitutional.
Meanwhile, consumer advocates say that most families now need to borrow to send their children to college and that they will require more affordable ways to repay their debt. Research shows that student loans make it harder for people to start businesses, buy a house and even have children.
In addition to scrapping SAVE and leaving borrowers’ with just one IDR plan option, Republican lawmakers may also move to end the loan forgiveness that borrowers are currently entitled to after a certain time period on the plans, experts said.
That would deprive many borrowers of a way out of their debt, according to Kantrowitz.
“It will effectively be a form of never-ending indentured servitude,” he said.