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GOP lawmakers compiled a list of ideas to help shape the budget this year.
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The ideas included rescinding Biden’s student-debt relief efforts, including the SAVE plan.
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Republicans have also proposed ideas that have bipartisan support, like ending interest capitalization.
President Donald Trump and the new Republican-controlled Congress could make major changes for millions of student-loan borrowers.
That new GOP trifecta is likely to unwind several of former President Joe Biden’s moves on student debt relief. A memo compiled by Republicans on the House Budget Committee and viewed by Business Insider put forth a list of options that included changes to education programs that could appear in a coming spending bill. It suggested repealing Biden’s SAVE income-driven repayment plan, repealing regulations that allowed for debt relief for defrauded borrowers, and limiting eligibility for Public Service Loan Forgiveness.
The memo also proposed allowing borrowers who default on their student loans to be eligible for a second “rehabilitation loan,” which would allow borrowers to exit default by making nine payments. The law only allows borrowers to rehabilitate their loans once. It also suggested reforming the Pell Grant to expand its eligibility to short-term credential programs.
A separate budget blueprint prepared by GOP members on the budget committee pledged to stop Biden’s “student loan bailout,” saying that “our budget resolution stops all forms of these unconstitutional, inflationary, and regressive student loan debt cancellations.”
Biden concluded his term with a final week of targeted student-debt relief measures for borrowers. He announced targeted relief for thousands of nonprofit and government workers, those with total and permanent disabilities, and those the Education Department found were defrauded by their schools, bringing total relief under Biden to $188.8 billion for 5.3 million borrowers.
The Education Department did not immediately respond to a request for comment from Business Insider on Trump’s priorities for higher education and student-loan borrowers. However, Trump has previously been critical of Biden’s debt relief efforts, and it’s likely his administration would support GOP legislation to curb Biden’s expanded relief and repayment efforts.
Rep. Tim Walberg, chair of the House education committee, told BI that he remains “committed to helping address the rising cost of college tuition.”
“Republicans are committed to pursuing policies that will lower the cost of college and protect students and taxpayers from colleges and universities that offer degrees that aren’t worth the cost,” Walberg said.
GOP higher education plans
The GOP memo said that eliminating the SAVE plan and streamlining other income-driven repayment plans would save $127.3 billion over a decade. The SAVE plan, first introduced in 2023, was intended to make monthly student-loan payments cheaper with a shorter timeline for loan forgiveness. The plan faced lawsuits from GOP-led states, and enrolled borrowers are on forbearance as they await a final court decision.
Repealing Biden’s regulations making it easier for borrowers who the government determined were defrauded by their colleges to get loan forgiveness is also among the GOP’s suggestions. The memo said this would save a total of $14.6 billion over a decade.
Additionally, the memo proposed ending interest capitalization, which is when unpaid interest is tacked onto a borrower’s principal balance, causing their overall debt load to surge. This is an idea that Democratic lawmakers have voiced support for, as well.
Some of these ideas have been previously floated in GOP legislation. The College Cost Reduction Act, introduced by GOP Rep. Virginia Foxx last January, outlined various priorities that included capping certain forms of financial aid and limiting the education secretary’s authority to implement new relief and repayment programs. The legislation would help ensure students do not take on debt they cannot afford, Foxx said.
“Student-loan debt is skyrocketing, and completion rates are plummeting. There’s bipartisan agreement that lasting reforms are needed to correct course,” Foxx told BI after the bill was introduced last year.
While Republicans hold control over Congress, their proposals are still likely to face pushback from Democratic lawmakers. Democrats on the House’s education committee introduced their road map for higher education affordability last year, which included a range of legislation that addressed financial transparency and making relief easier through PSLF.
For now, borrowers are still waiting to hear more from Trump and lawmakers on any changes that could be implemented. Trump and some Republicans have even supported getting rid of the Education Department altogether, but doing so would be operationally complicated and require approval from Congress.
Read the original article on Business Insider
