The past few months have been a rollercoaster ride for federal student loan borrowers. Millions of borrowers struggle with repaying their loans. In fact, a study from the Consumer Financial Protection Bureau found that 63% of borrowers had issues keeping up with their payments, and more than one-third missed at least one payment.
For those borrowers, income-driven repayment (IDR) plans can provide relief. However, President Trump’s administration has challenged some aspects of IDR plans.
To address these issues, House Education and Workforce Committee Republicans released a new plan for handling student loans. If the plan goes into effect, it would have a significant impact on borrowers.
Key Changes in the Republican Student Loan Plan
The proposed changes are significant, but there are four key areas that would affect students and existing borrowers:
Borrowing Limits
Currently, there are limits on how much students can take out in federal loans per year and over their lifetimes. Under the new plan, the borrowing limits would be lowered.
| Borrowing Limits for Federal Student Loans | ||
| Current Limit | Proposed Limit | |
| First Year Undergraduate Annual Limit | Dependent: $5,500 (no more than $3,500 may be subsidized loans) Independent: $9,500 (no more than $3,500 may be subsidized loans) | Median cost of students’ program of study |
| Second Year Undergraduate Annual Limit | Dependent: $6,500 (no more than $4,500 may be subsidized loans) Independent: $10,500 (no more than $4,500 may be subsidized loans) | Median cost of students’ program of study |
| Third Year and Higher Annual Limit | Dependent: $12,500 (no more than $5,500 may be subsidized loans) Independent: $9,500 (no more than $5,500 may be subsidized loans) | Median cost of students’ program of study |
| Graduate or Professional School | $20,500 unsubsidized; no limit on Grad PLUS loans | Median cost of students’ program of study |
| Parent Loans | No limit | $50,000 |
| Aggregate Limits | Dependent: $31,000 (no more than $23,000 may be subsidized loans) Independent: $57,500 for undergraduates (no more than $23,000 may be subsidized loans) Graduate: $138,500 for graduate or professional students, including all loans used for undergraduate study | Undergraduate: $50,000 Graduate school: $100,000 Professional study: $150,000 (inclusive of undergraduate and graduate loans) |
The lowered limits may make it difficult for students to cover the total cost of attendance, causing students to have to explore other financing options, such as private student loans.
Parent Loans
Currently, parents of undergraduate students can borrow up to the student’s total cost of attendance, with no cap on how much they can borrow per year or in their lifetime. The proposed plan would change that; parents could not take out more than $50,000, which may make it difficult for parents of multiple children to cover the cost.
Additionally, the plan would require students to take out the maximum amount of unsubsidized loans before families are eligible for PLUS loans.
Repayment Plans
Currently, students who cannot afford their payments under a 10-year standard repayment plan can enroll in an IDR plan, which bases borrowers’ payments on a percentage of their discretionary income.
However, these plans have been the target of criticism in recent months. The plan would overhaul available repayment plans.
The proposed plan would eliminate income-contingent repayment (ICR), and borrowers currently on that plan would be transferred to a new plan or the income-based repayment (IBR) plan.
Loans issued on or after July 1, 2026, would be eligible for just one payment plan: the new Repayment Assistance Plan (RAP):
- Payment amount: Depending on the borrowers’ income, borrowers would pay between 1% and 10% of their incomes, with a minimum payment amount of $10.
- Interest waivers: The government would waive unpaid interest if the borrower’s payment doesn’t cover the accrued interest as long as the borrower makes their payments on time.
- Repayment term: Under the RAP, borrowers may be in repayment for up to 30 years.
Grant Changes
For Pell Grants, a federal grant for low-income students, the plan would raise the number of credit hours required to qualify as a “full-time” student; only full-time students are eligible for the maximum grant amount.
It would also eliminate Pell Grants for students enrolled in school on a lower than half-time basis.
What’s Next for Borrowers
Supporters of the proposed plan say it makes necessary changes to the student loan system, curbing out-of-control borrowing and confusing repayment plans. However, opponents say the plan would negatively affect low-income students and families, making it harder to pay for college.
To cover the gap that federal financial aid wouldn’t, borrowers would have to secure other financing, such as independent grants, scholarships, private student loans, or family contributions.
The plan would have to pass the House and Senate, but as a reconciliation package, it only needs a simple majority in the Senate. That’s not guaranteed, but since Republicans currently control the Senate, it’s likely the plan will pass. The changes would occur at different stages, with some of the most significant adjustments occurring to new loans issued on or after July 1, 2026.
