Topline
The House Rules Committee is debating President Donald Trump’s sweeping domestic policy bill, which proposes a major overhaul of student loan programs and repayment plans in order to fund the bill’s tax cuts—with critics saying it could force some toward taking out private loans and increase monthly payments for others.
Key Facts
The domestic policy bill—referred to as the president’s “One Big Beautiful Bill”—is now moving through the House, with the Rules Committee debating the bill on Wednesday and House Speaker Mike Johnson suggesting it could come up for a vote on the House floor swiftly after it’s approved in committee.
The bill—which has not yet been finalized and could still change in the Senate—would extend the 2017 tax cuts passed in Trump’s first term and direct billions of dollars toward major priorities of the president’s policy agenda, like renewing funding for a border wall between the U.S. and Mexico.
As a way to offset its tax cuts and Trump-friendly spending, the bill also includes controversial cuts to Medicaid and food assistance—and broadly overhauls federal student loan programs, affecting both people who take out loans and those still paying off loans.
The bill, as of the latest draft publicly released, abolishes most loan repayment plans and only gives borrowers—including current borrowers—two options for paying their loans off, either through a standard repayment plan (paying the same amount every month) or a new plan based on annual income.
It also imposes limits and restrictions on new loans and Pell Grants.
Student borrower advocates have strongly decried the bill’s provisions, with the Student Borrower Protection Center (SBPC) projecting it would disqualify many borrowers who now receive Pell Grants, force more borrowers to take out private loans due to the new federal limits, and increase monthly payments for many existing borrowers who are paying down their loans.
Trump’s Bill Changes How Student Loan Amounts Are Calculated
The bill proposes changing the formula for how much the federal government grants borrowers. Loans would now be calculated based on the median cost of all similar college programs, rather than the cost to attend the specific school or program the student is attending. (It is unclear how that number will be calculated.) That means students attending higher-priced schools will receive less money, because the rate will take into account other schools that are less expensive.
Trump’s Bill Imposes New Maximum Borrowing Limits
The bill places new caps on the amount of federal student loans that both parents and students can take out, limiting it to $50,000 in total undergraduate loans that a student can take out and $100,000 or $150,000 for graduate and professional programs, based on the type of program. Parents are also limited to only taking out $50,000 total in federal loans to pay for their children’s education, which applies even if parents are taking out loans for multiple children. Students and their parents cannot borrow more than $200,000 in total—including both undergraduate and graduate loans—under the bill, with those limits set to take effect in July 2026.
The Plan Cuts Some Loan Eligibility
Lawmakers propose limiting some federal loans, including restricting graduate students and parents from receiving Federal Direct PLUS Loans starting in July 2026.
Trump’s Policy Bill Gets Rid Of Most Student Loan Payment Plans
If passed, the bill would abolish most of the current options that borrowers have to repay their student loans, instead giving borrowers—including those who have already been paying off loans—the choice of only a standard repayment plan or a new Repayment Assistance Plan (RAP) based on annual income. The standard repayment plan means borrowers will pay back their loan at a fixed rate each month. Loans of up to $25,000 will be paid over the course of 10 years, loans of up to $50,000 will be paid over 15 years, loans of up to $100,000 will be paid over 20 years and loans over that amount will be spread out over 25 years. RAP replaces existing income-driven repayment plans, but still allows borrowers to make their monthly payments based on income. Borrowers pay rates based on their annual income, which range from $120 per year for those making less than $10,000 (divided up into $10 monthly payments) to 10% of gross annual income for those making over $100,000. Unlike previous income-based plans, RAP allows borrowers’ remaining loans to be forgiven after 30 years of making payments—up from 20 or 25 years under current plans—and has a minimum payment of $10 each month, while low-income borrowers can now qualify for $0 repayments.
Trump’s Bill Changes Forbearance And Deferring Payments On Student Loans
Trump’s policy bill gets rid of current rules that allow borrowers to temporarily have their loan payments deferred due to unemployment or economic hardship, which will apply to borrowers who take out loans starting in July 2025. It also places new limits on forbearance—a temporary pause on loan payments—which states loans can’t be in forbearance for more than 9 months during any 24-month period.The bill does help borrowers by allowing them to now rehabilitate their loans twice, rather than once. That refers to when borrowers can get out of being in default on their loans by making a certain number of on-time payments under a rehabilitation agreement.
Who Will The Changes To Student Loan Payment Affect?
The new provisions on loan repayments will apply to all borrowers who are still repaying their debt, though existing borrowers can still defer payments due to economic hardship, and count those months in which payments were deferred toward their 30 years of payments before loans are forgiven. The bill text states RAP would take effect on July 1, 2026, though it also directs the Secretary of Education to start transitioning to the new payment policies within nine months of the bill being enacted into law.
Potential Impacts Of The Trump Policy Bill
The restrictions on new federal student loans could force more students and parents to turn to private lenders, which currently make up less than 10% of all student loans issued. Private loans have many disadvantages as compared with federal ones, as they typically have higher interest rates, are not eligible for income-based repayment plans and don’t offer forgiveness programs. SBPC also projects RAP will broadly increase borrowers’ payments as compared with previous Biden-era income-based payment plans designed to help borrowers make lower payments. The average borrower with a college degree will pay $2,928 more per year than under the Biden-era SAVE plan, SBPC estimates, and the bill also means borrowers will spend longer paying off their loans than they would under current rules.
Trump’s Policy Bill Adds Restrictions For Pell Grants
The policy bill states students can’t receive Pell Grants if they’re enrolled in school less than half time and raises the necessary number of credits taken per year from 24 to 30. It also disqualifies students from Pell Grants if their student aid index—a number demonstrating a student’s financial need, based on their families’ financial resources and expenses—is at least twice the maximum Pell Grant given that year. These changes could mean more than 61% of recipients could lose their grants or have them reduced, according to SBPC, noting that it will affect many low-income students who are attending school in their spare time, and families that might have a high aid index, but have higher expenses from putting multiple children through school. The bill also establishes a new Pell Grant program for short workforce training programs, which must be less than 15 weeks long and either lead to a postsecondary certification or is recognized by a state’s governor as aligning with a “high-skill, high-wage” or “in-demand” job or industry.
Big Number
42.5 million. That’s the number of borrowers with outstanding federal student loan debt as of the second quarter of 2025, according to the Department of Education.
Key Background
Student loan debt has become a key political issue over the past few years, as Democrats have fought for loan forgiveness and the Biden administration sought to provide sweeping debt relief, only to have Republicans challenge it in court and the Supreme Court strike it down. While the Biden administration still made numerous piecemeal moves to forgive Americans’ debt, the Trump administration has not followed suit, with Education Secretary Linda McMahon saying in April that “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.” Trump has ordered the student loan portfolio to move under the Small Business Administration as he seeks to abolish the Department of Education, and he has also sought to restrict loan forgiveness for public servants so that it excludes employees working at organizations that are opposed to his policy agenda. Most notably, the Trump administration resumed debt collections May 5 for borrowers who have defaulted on their student loans, after collections had previously been on pause since the COVID-19 pandemic. The move is expected to impact millions of borrowers who haven’t paid their loans for approximately nine months, and the Trump administration intends to garnish a portion of workers’ wages if their loans remain unpaid.
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