Last week, Republicans on the House Education and Workforce Committee released their own Very Big Idea. Collectively, their aim is to make the United States’ student loan and financial aid system completely unrecognizable. This proposal seeks to implement significant changes, including limits on student borrowing and a reduction in repayment options for borrowers.
The proposal includes a $50,000 borrowing limit for federal student loans offered to undergraduate students. This cap is set to be implemented starting July 1, 2026. Graduate students would see a much higher cap of $100,000 on the same timeline. These limits strike a balance of holding the line on increasing college inflation costs, while making sure students don’t graduate with a crushing debt burden.
The proposal would get rid of these deferments for federal student loan borrowers. This reform will only affect future borrowers who incur debt after July 2025. These proposed changes are a step toward making it easier to borrow money. They have raised fears as to their potential impact on students most affected by financial hardships.
The federal Pell Grant program remains the most important program for financial aid for millions of students. It remains a core theme in all our sessions. The program, which was created in 1965, has served more than 6 million undergraduate students through 2020. For the 2025-26 award year, the maximum award amount would increase to $7,395. While the Pell Grant program continues to support many, scrutiny arises regarding how these proposed changes could affect access to such financial aid.
Under the new proposal, allowing IDR—income-driven repayment—income-driven repayment—IDR plans would be continuing options. These plans allow borrowers to keep their monthly payments low by capping them at a certain percentage of their discretionary income. As of September 2024, more than 12 million people are signed up for Income-Driven Repayment (IDR) plans. Detractors say the proposed curbs will cut off educational opportunities to thousands of other students.
For his part, committee chairman Tim Walberg, R-Mich., insisted that the need for this proposal was clear.
“For decades Congress has responded to the student loan crisis by throwing more and more taxpayer dollars at the problem — never addressing the root causes of skyrocketing college costs.” – Tim Walberg, R-Mich.
Even though the Administration is making this claim, many experts are sounding alarms over what the changes could mean. Sameer Gadkaree, a higher education policy expert, voiced fierce opposition to the plan’s effects.
“The committee’s current proposal would severely restrict college access by slashing financial aid programs, eliminating basic consumer protections and making it harder to repay student loan debt.” – Sameer Gadkaree.
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