Latest news with #StudentSuccessandTaxpayerSavingsPlan
Forbes
02-05-2025
- Business
- Forbes
Major Update For 8 Million Borrowers: GOP Plan Would Reshape Student Loan Forgiveness And Kill SAVE
The GOP's student loan plan would eliminate the SAVE program and overhaul student loan forgiveness, ... More forcing 8 million borrowers to prepare for major repayment changes. Student loan borrowers counting on student loan forgiveness via former President Joe Biden's Saving on a Valuable Education plan (more commonly known as the SAVE plan) will likely see it effectively vanish, not by a court order, but by an act of Congress. House Republicans have unveiled a sweeping proposal, the Student Success and Taxpayer Savings Plan, which includes an end to the SAVE plan. The GOP student loan plan proposes shifting all existing income-driven repayment options into a single, new plan via budget reconciliation, a procedural path requiring only a simple majority vote. Using the savings from overhauling student loan forgiveness and ending the borrower-friendly SAVE plan will help pay for extending President Donald Trump's tax cuts. This shift signals that the SAVE plan's demise is increasingly inevitable and more likely to come from Capitol Hill than the courtroom. "Folding the four current IDR plans into one would effectively end President Joe Biden's Saving on a Valuable Education plan, which has been tied up in court since last year, The Washington Post noted. 'Higher-education experts say congressional Republicans want to end SAVE through reconciliation, rather than the courts, to use the savings to offset Trump's tax cuts. And with the case stalled in the courts, they might get their way,' it added. In late April 2025, House Republicans introduced proposals to reform student loan repayment dramatically. According to House Education Committee chairman Tim Walberg (R-Michigan), the legislation would save over $330 billion in spending, savings Republicans plan to redirect toward financing an extension of the 2017 Trump tax cuts. By packaging these student loan changes into a reconciliation bill, the GOP aims to fast-track the rollback of Biden's loan relief policies with only a simple majority. The House GOP proposal consolidates all existing income-driven repayment plans into one, dubbed the Repayment Assistance Plan. This includes terminating Biden's SAVE plan as well as ICR and PAYE repayment options for loans taken out after July 1, 2026. SAVE proved extremely popular, with over 8 million borrowers enrolling before a federal court paused the program in late 2024 amidst a Republican-led lawsuit. That ongoing litigation had left SAVE's fate in limbo, but Republicans aren't waiting for a final verdict. By legislating away the SAVE plan now, they can achieve a political win and simultaneously claim substantial budgetary savings to offset tax cuts. In other words, the GOP is attempting to kill the SAVE plan through Congress rather than rely on the courts to do the job. Oral arguments in the court case challenging the administration's authority to implement SAVE are currently slated for October 24. Meanwhile, Republicans aim to pass a final reconciliation package between May and July; "the reconciliation process sets a deadline of September 30 to pass the bill or lose all of the benefits of the budget process," as NPR notes. From the Republican perspective, ending SAVE via reconciliation offers two advantages. First, it sidesteps uncertainty given that court cases can drag on or could be overturned on appeal, whereas a new law would definitively terminate SAVE. Second, the budgetary savings from eliminating future loan forgiveness under SAVE can be banked to help pay for other priorities, like Trump's tax cuts. So, what exactly would replace the SAVE plan? The House GOP bill proposes to shrink today's income-driven repayment options to a single plan, tentatively called the Repayment Assistance Plan. Here's how the new plan compares to SAVE: While the GOP's Repayment Assistance Plan retains income-based payments and interest relief to avoid debtor distress, it yanks away generous forgiveness terms and other borrower protections that define the SAVE plan. The result could be a much costlier repayment regime for most borrowers than SAVE promised, although some borrowers may find RAP a less expensive option (e.g., borrowers with a high-income growth rate). According to an analysis by the Student Borrower Protection Center, a typical borrower with a bachelor's degree would pay nearly $3,000 more per year under the Republican repayment framework versus what they would have spent on SAVE or similar plans. That translates to hundreds of dollars extra every month. In a letter, the advocacy group's director, Mike Pierce, warned lawmakers that the GOP student loan plan would make monthly bills "spike by hundreds of dollars" for millions, eroding the affordability gains that SAVE had introduced. Once heralded as a game-changer for affordable student loan repayment, the SAVE plan is likely on its last legs. Republicans have set their sights on dismantling it through Congress, and they might succeed even before the courts can opine. It behooves borrowers counting on SAVE's promise of low payments and eventual student loan forgiveness to start evaluating their options, including the potential Repayment Assistance Plan. The coming months will determine SAVE's fate, but the current signs point to an end of SAVE not by judicial decree but by legislative design.
Yahoo
01-05-2025
- Business
- Yahoo
Republicans move to overhaul student loans, including capping how much can be borrowed
WASHINGTON — Republicans are paving the way to massively restructure the federal student loan system in an attempt to cut billions of dollars in government spending to pay for President Donald Trump's forthcoming tax bill. The House Education and Workforce Committee advanced the Student Success and Taxpayer Savings Plan on Tuesday, one of 11 components of Republicans' massive reconciliation package aimed toward extending certain tax cuts before they expire at the end of this year. The bill passed along party lines and proposes massive changes to cut more than $330 billion in government spending. 'The fact that we are having this conversation is so well needed and long overdue,' Rep. Burgess Owens, R-Utah, who sits on the committee, told the Deseret News. 'This has been a process in which we've lost sight of the mission of why you get a degree. It's become about getting a piece of paper to say that because of the college I came from, I now deserve or am entitled to certain things. We want to make sure we focus on competency. Let's focus on skill sets. And that's the conversation we're finally having.' The bulk of the spending cuts comes from changes to federal loan repayment programs as well as new limits on how much borrowers can receive. The bill would eliminate income-contingent repayment plans, which allow borrowers to craft a monthly payment plan based on their income and family size. Instead, it would consolidate all existing repayment plans into only two options: the Standard Fixed Repayment Plan or the Repayment Assistance Plan. The first option would establish fixed monthly payments over a set amount of time, typically between 10 and 25 years, depending on the outstanding loan balance. The second would implement monthly payments based on income that would extend current forgiveness terms to 30 years, up from the current 20 or 25 years. That means borrowers would need to pay off their loans for at least five years longer before they are eligible for relief. The proposal would establish borrowing caps for students in an attempt to prevent over-borrowing and shield taxpayers from covering the extra costs. The limits would set a maximum cap of $50,000 for undergraduate students, $100,000 for graduate students and $150,000 for professional students. The limits would also eliminate the GradPLUS loan program for graduate students on or after July 1, 2026, with exceptions for some students depending on time of enrollment and loan amount. It also establishes a $50,000 cap on Parent PLUS loans, which allows parents to take out loans to help pay for their child's undergraduate college education. However, it would require the student to borrow the maximum amount they can before the parent is entitled to those funds. 'Our current student loan system is broken and has left students holding over $1.6 trillion in federal student loan debt, with taxpayers estimated to lose hundreds of billions of dollars on loans disbursed over the next decade,' committee Chairman Tim Walberg, R-Mich., said in a statement. As part of the proposal, Republicans are targeting colleges and universities to take more accountability when students over-borrow and are unable to pay off their loans. The bill carves out language to make schools responsible for reimbursing taxpayers for part of their financial losses if students 'don't see financial value' from their degrees and can't repay their loans. The legislation would require colleges to pay off a portion of those unpaid loans based on 'how much of a return on investment the degree provided.' 'We're going to first of all make sure (schools have) some skin in the game, so that the degrees that are being sold by these colleges have some value,' Owens said. 'If they don't have some skin in the game, they have to take part in repaying it.' The amount that schools would owe to the Treasury would be calculated based on the total price the institution charges students for a specific program as well as the earnings received by the student after they graduate — or, if they do not graduate, the completion rate of the school or program. It's not entirely clear if there will be monetary requirements for those 'value-added earnings' for students or how federal officials will force reimbursements by colleges. Owens told the Deseret News those details have not yet been finalized but will likely be hashed out in future legislation. One of the main components of the proposal would overturn a Biden-era 'SAVE' repayment plan, a federal-income based program intended to make student loans more affordable and prevent growing debt over time. It's under this plan that loans are forgiven after 20 or 25 years. It also defines discretionary income as anything 225% above the poverty line, which is far more generous than the previous 150%. Republicans have long sought to repeal that program, arguing it lowers costs at the expense of taxpayers. 'We have a new sheriff in town,' Owens said. 'We now have an administration that cares about those who took out loans and is not trying to put federal programs on the back of the taxpayer.' Democrats have decried the proposal, arguing it would raise costs for colleges while limiting students' options for loan repayment. Some have argued that the loan repayment plans would also make it more expensive for those who have already enrolled in current programs that are set to be restructured if the package passes. 'This current reconciliation plan would increase costs for colleges and students, limit students' access to quality programs … and then take the so-called 'savings' to pay for more tax cuts for the wealthy and the well-connected,' committee ranking member Rep. Bobby Scott, D-Va., said. The proposal is set to be combined with other committees' reconciliation proposals, which will then be packaged as one massive bill to be passed by the House later this year. GOP leaders are hoping to get the full package through the House by the end of May, an ambitious timeline that could hit some snags due to lingering policy disagreements.
NBC News
01-05-2025
- Business
- NBC News
Here's what your monthly student loan bill could be under a new Republican plan
House Republicans have a plan to drastically change how millions of Americans repay their student debt. Under the GOP's new proposal, known as the Student Success and Taxpayer Savings Plan, there would be just two repayment options for those with federal student loans. Currently, borrowers have about 12 ways to repay their student debt, according to higher education expert Mark Kantrowitz. If the GOP plan is enacted, borrowers would be able to pay back their debt through a plan with fixed payments over 10 to 25 years, or via an income-driven repayment plan, called the ' Repayment Assistance Plan.' Under the RAP plan, monthly bills for borrowers would be set as a share of their income, said Jason Delisle, a nonresident senior fellow at the Urban Institute. The percentage of income borrowers' would have to pay rises with their earnings, starting at 1% and going as high as 10%. House Republicans unveiled their agenda to overhaul the student loan and financial aid system at the end of April, in an effort to tout savings for President Donald Trump's planned tax cuts. Here's what monthly bills for student loan borrowers could be if the proposal becomes law. What's new about the GOP student loan payment plan While the U.S. Department of Education's current income-driven repayment plans typically conclude in loan forgiveness after 20 or 25 years, the new GOP plan wouldn't lead to debt cancellation for 30 years. New borrowers also wouldn't have a share of their income protected anymore, as they do now. a $50 discount on their monthly student loan payment per child. The GOP changes to student loan repayment plans would only apply to loans made after July 1, 2026. Those with existing loans should still have access to most of the current repayment plans.
CNBC
01-05-2025
- Business
- CNBC
Here's what your monthly student loan bill could be under a new Republican plan
House Republicans have a plan to drastically change how millions of Americans repay their student debt. Under the GOP's new proposal, known as the Student Success and Taxpayer Savings Plan, there would be just two repayment options for those with federal student loans. Currently, borrowers have about 12 ways to repay their student debt, according to higher education expert Mark Kantrowitz. If the GOP plan is enacted, borrowers would be able to pay back their debt through a plan with fixed payments over 10 to 25 years, or via an income-driven repayment plan, called the "Repayment Assistance Plan." Under the RAP plan, monthly bills for borrowers would be set as a share of their income, said Jason Delisle, a nonresident senior fellow at the Urban Institute. The percentage of income borrowers' would have to pay rises with their earnings, starting at 1% and going as high as 10%. House Republicans unveiled their agenda to overhaul the student loan and financial aid system at the end of April, in an effort to tout savings for President Donald Trump's planned tax cuts. Here's what monthly bills for student loan borrowers could be if the proposal becomes law. While the U.S. Department of Education's current income-driven repayment plans typically conclude in loan forgiveness after 20 or 25 years, the new GOP plan wouldn't lead to debt cancellation for 30 years. New borrowers also wouldn't have a share of their income protected anymore, as they do now. But the plan waives interest on certain payments, and parents receive a $50 discount on their monthly student loan payment per child. More from Personal Finance:Is college still worth it? It is for most, but not allHow to maximize your college financial aid offerWhat student loan forgiveness opportunities remain under Trump The GOP changes to student loan repayment plans would only apply to loans made after July 1, 2026. Those with existing loans should still have access to most of the current repayment plans.
Forbes
30-04-2025
- Business
- Forbes
Congress Takes Huge Step To Repeal 6 Student Loan Repayment Plans And Force Many Borrowers To Pay More
WASHINGTON, DC - APRIL 29: Speaker of the House Mike Johnson (R-LA) speaks at a press conference ... More with other members of House Republican leadership, following a meeting of the House Republican Conference, in Washington, DC on April 29, 2025. A key GOP House committee passed legislation that would fundamentally reshape federal student loan repayment and loan forgiveness. (Photo by Nathan Posner/Anadolu via Getty Images) A key House committee passed the Student Success and Taxpayer Savings Plan on Tuesday, a Republican bill that is part of the party's broader effort to enact President Donald Trump's legislative agenda of extending massive tax cuts paid for by slashing government spending. If the bill is ultimately enacted through the budget reconciliation process, it would fundamentally remake the entire federal student loan repayment system by cutting off or pushing out loan forgiveness and forcing millions of borrowers into more expensive repayment plans. 'Today, the Education and Workforce Committee passed the Student Success and Taxpayer Savings Plan—a vital portion of Trump's big, beautiful bill to provide tax relief for American families and small businesses, rein in wasteful spending, and reduce the federal budget deficit,' said the committee in a statement on Tuesday. 'Our current student loan system is broken and has left students holding over $1.6 trillion in federal student loan debt, with taxpayers estimated to lose hundreds of billions of dollars on loans disbursed over the next decade,' said Education and Workforce Committee Chairman Tim Walberg (R-MI) following the commitee's passage of the bill. 'The bill passed by Committee Republicans today not only would save taxpayers over $350 billion but also bring much-needed reform in three key areas: simplified loan repayment, streamlined student loan options, and accountability for students and taxpayers. I'm proud of the Committee's work today to finally stand up and end the status quo of endless borrowing.' But the proposed changes to student loan repayment programs would have profound impacts for millions of borrowers, potentially leading to higher payments and cutting off loan forgiveness eligibility. Here's a breakdown. A core element of the Student Success and Taxpayer Savings Plan bill is a complete overhaul of the federal student loan repayment system. And the changes won't just impact new borrowers; many existing borrowers currently in repayment on their student loans would be affected, too. Currently, there are about a dozen federal student loan repayment plans, broken into two broad groups. There is a collection of repayment plan options with fixed monthly payments over a traditional amortization schedule, without regard to a borrower's income or their ability to pay. This includes a 10-year Standard plan, a 25-year Extended plan, a Graduated repayment option where payments start off relatively low and increase over time, and consolidation Standard plans with terms of up to 30 years, depending on the initial balance. Then, there are income-driven repayment plans. IDR is an umbrella term that encompasses a collections of repayment plans tied to a borrower's income and family size, with borrowers entitled to student loan forgiveness for any remaining balance by the end of the repayment term, typically 20 or 25 years. Under the IDR umbrella, there are three 'income-contingent' repayment plans including Income-Contingent Repayment, Pay As You Earn, and the new SAVE plan which was designed to be the most affordable IDR option. Separately, there are two 'income-based' repayment plans; an older version of IBR that is the most accessible IDR program, and a newer version of IBR that is about 33% less expensive than it's older counterpart with a 25-year student loan forgiveness term instead of 20. This 'new' IBR plan is only available for borrowers who first took out federal student loans on or after July 1, 2014. The Student Success and Taxpayer Savings Plan would upend this federal student loan repayment plan system by narrowing down the number of plans to just two. One 'Standard' plan option would have fixed payments on a term of between 10 and 25 years, depending on the borrower's balance. And a new income-driven option called the 'Repayment Assistance Plan' (or RAP for short) would have monthly payments comparable to the PAYE plan and new IBR, but with a 30-year student loan forgiveness term instead of 20 or 25 – effectively forcing borrowers to repay their loans for far longer. It would be one thing if, under the bill's terms, current student loan borrowers would be able to continue repaying their student loans under existing plans. That would be largely true for borrowers currently in repayment under Standard and Graduated plans. But for current borrowers in one of the four existing IDR plans, things get very complicated. A prior version of the Student Success and Taxpayer Savings Plan (called the College Cost Reduction Act) would have grandfathered in current borrowers into the existing IDR system. But the legislation passed by Republicans in the House Education and Workforce Committee on Tuesday would not do that. The bill would repeal all income-contingent repayment plans including the ICR, PAYE, and SAVE plans. It also would eliminate the 'new' IBR plan. That effectively would leave only the older, more expensive version of IBR, and the new RAP plan created by the bill. If enacted, this will have profound impacts for millions of federal student loan borrowers. The more than eight million borrowers who have been in the SAVE plan will be forced under the bill's terms into the older version of IBR, which could double or even triple their monthly payments. They could opt into the RAP plan instead to have somewhat more affordable payments, but that would extend their repayment term by five to 10 years or more (SAVE allowed for student loan forgiveness on varying timelines between 10 and 25 years). Meanwhile, borrowers currently in PAYE and 'new' IBR would also be forced into the older version of IBR under the terms of the legislation. This will result in most of these borrowers experiencing roughly a 33% increase in their monthly payments, as the older version of IBR uses a 15% discretionary income formula rather than 10% for PAYE and new IBR. As with SAVE plan borrowers, those who are in PAYE and new IBR could opt to switch into the new RAP plan instead, which would have comparable payments for most middle-income borrowers (although lower-income borrowers would have higher payments under RAP). But the tradeoff is an additional five to 10 years in repayment due to RAP's 30-year student loan forgiveness term. Borrowers would also be locked into RAP if they opt in – they would not be able to change their minds later and switch to IBR. The situation would be particularly complicated for Parent PLUS borrowers. Parent PLUS borrowers are generally ineligible for income-driven plans, but if they consolidate their Parent PLUS loans into a Direct consolidation loan, that Direct consolidation loan can be repaid under the ICR plan. For older Parent PLUS borrowers on a fixed income, ICR can be a lifeline when no other fixed repayment plans are affordable. But the Student Success and Taxpayer Savings Plan eliminates the ICR plan. Under the bill, Parent PLUS borrowers who have already consolidated their loans and are enrolled in ICR as of the bill's enactment would be automatically moved into the older version of IBR – which may actually lower their monthly payments, since IBR is generally a more affordable plan than ICR. But all other Parent PLUS borrowers would be permanently locked out of any income-driven repayment option, since they cannot enroll in RAP and would be barred from enrolling in IBR after the bill's passage. This would also effectively prevent Parent PLUS borrowers not already enrolled in income-driven repayment from pursuing student loan forgiveness, as well. If these borrowers cannot enroll in IDR, they cannot get their loans forgiven under IDR. They also would not be able to benefit from Public Service Loan Forgiveness, which typically requires that borrowers enroll in an IDR plan. For the time being, none of these changes to student loan repayment plans have become law yet. The Student Success and Taxpayer Savings Plan must now go to the House Budget Committee before it can be sent to the full House for a floor vote. The Senate must also pass its own reconciliation bills. Then, leaders from key House and Senate committees must hammer out any differences between the two versions of the bills before they can finalize the legislation, pass it through both chambers of Congress, and send it to President Trump for his signature. There could be changes to the legislation at nearly any step during this process. If the bill in its current form ultimately becomes law, borrowers could see changes to their student loan repayment plan, their monthly payments, and their student loan forgiveness eligibility by the end of this year.
