House Republicans are exploring ways to reduce spending in order to finance President Donald Trump’s tax cuts. One proposal suggests increasing federal student loan payments for millions of borrowers. By using the budget reconciliation process, GOP lawmakers aim to make significant cuts to the federal budget, estimating savings of $127.3 billion over a decade from the student repayment plan overhaul. The timeline for these changes is uncertain, and the final plan may differ from the initial proposals. According to an estimate by The Institute for College Access & Success, under the GOP’s repayment program changes, the average student loan borrower could face an additional $200 monthly payment. Michele Shepard Zampini, senior director of college affordability at the institute, highlighted that many borrowers cannot afford this increase. The proposed Republican plans could raise the average borrower’s monthly bill from $95 to $288. These changes would likely impact new borrowers and may consolidate income-driven repayment plans into a single option, a shift from the current system. Some experts warn that these measures could disproportionately burden student loan borrowers and hinder access to higher education.
Ourt 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. More from CNBC: Fashion’s most hated garment — the skinny jean — is making a comeback. How the wealthy families behind Chick-fil-A and Panda Express manage their riches. Steel and aluminum stocks surge on Trump’s plan to impose 25% tariffs on imports to the U.S.
