GOP proposes overhaul of student loan repayment system

[UNITED STATES] House Republicans are proposing a significant overhaul to the federal student loan repayment system, aiming to dramatically reduce the number of repayment options available to borrowers.

The proposal, dubbed the Student Success and Taxpayer Savings Plan, would pare down the current array of roughly 12 federal repayment options to just two. The move is part of a broader Republican push to simplify what they describe as a convoluted and inefficient loan system.

Supporters of the plan argue that streamlining repayment choices would help borrowers better understand their obligations and avoid falling into default. Critics, however, caution that eliminating a range of existing plans could strip away essential protections for low-income borrowers, potentially increasing financial hardship for vulnerable groups.

Under the Republican proposal, federal student loan borrowers would be offered two choices: a fixed repayment plan with terms ranging from 10 to 25 years, or an income-driven plan known as the Repayment Assistance Plan (RAP).

According to Jason Delisle, a nonresident senior fellow at the Urban Institute, the RAP plan would tie monthly payments to a borrower’s income, starting as low as 1% and scaling up to 10% depending on earnings. The plan stands in stark contrast to the Biden administration’s SAVE plan, which caps monthly payments between 5% and 10% of discretionary income and includes loan forgiveness after 10 to 20 years.

The GOP’s proposal, by comparison, sets a 30-year timeline for forgiveness—drawing sharp criticism from borrower advocates who say the extended duration could keep low-income Americans in debt well into retirement.

The plan was introduced at the end of April as part of House Republicans’ broader efforts to reshape the federal student aid system, with the added goal of freeing up funds to support former President Donald Trump’s proposed tax cuts.

The timing comes amid ongoing political and legal disputes over student debt relief. Although the Supreme Court struck down President Biden’s broad cancellation effort in 2023, the administration has continued to pursue targeted forgiveness through programs like income-driven repayment reforms and Public Service Loan Forgiveness. Republicans contend that their plan represents a more sustainable and fiscally responsible approach.

Key Changes in the Republican Proposal

Unlike current Department of Education income-driven plans, which generally forgive remaining debt after 20 or 25 years, the GOP’s new structure would delay forgiveness until 30 years. New borrowers under this system would also lose protections that currently shield a portion of their income from repayment calculations.

These changes could disproportionately affect women and borrowers of color, who are more likely to face wage disparities and higher student debt loads. Equity advocates warn that the plan could deepen existing gaps in repayment outcomes.

However, the proposal includes some borrower-friendly provisions. Interest would be waived on qualifying payments, and parents would receive a $50 monthly discount per child on their loan payments.

Importantly, the new rules would only apply to loans issued after July 1, 2026. Borrowers with existing student debt would still be able to access most of the current repayment plans.