The Senate has passed the Big Beautiful Bill, which includes significant changes to student loan programs.
This bill is part of the reconciliation process and represents a major overhaul of the current student loan system.
The big picture: The bill passed by the Senate includes revisions to student loan repayment plans, the amount students can borrow from the federal government, and how student loan deferment works. Advocates are concerned that these changes could lead to higher monthly payments for borrowers.
- If the bill is passed in its current form after going back to the House for approval, it will bring about some of the most substantial changes to the student loan system in years.
- Some of the key changes proposed in the bill include reducing student loan repayment options to just two plans over the next few years. This would phase out popular plans like the Biden administration’s SAVE option in favor of a new Repayment Assistance Plan or a standard plan.
- Under the standard plan, borrowers would have a repayment period ranging from 10 to 25 years, depending on the amount borrowed. The new Repayment Assistance Plan would require 30 years of payments before loan forgiveness is allowed, an increase from the previous options that required 20 to 25 years.
Go deeper: The bill also seeks to eliminate the Graduate PLUS Program, which covers the full cost of attendance for graduate or professional students. Instead, there will be caps on lifetime loans for graduate, medical, and law students.
- Other changes in the bill include capping Parent PLUS loans and altering the eligibility criteria for Pell Grants by excluding those with full scholarships while adding individuals in workplace training programs.
- Borrowers struggling to repay their loans will no longer be able to defer due to unemployment or economic hardship. However, they will be allowed to rehabilitate defaulted loans twice, compared to the current limit of one time.
- The changes proposed by the bill have raised concerns among advocates, who warn that the new repayment plans could lead to higher monthly payments for most borrowers.
