Student loan borrowers face abrupt 180 as GOP budget plans threaten to raise payments

Student loan borrowers could see their payments increase under budget plans currently under discussion by House Republicans, a violent about-face after years of working with the Biden administration to lower payments and secure debt relief.

While the GOP proposals might change quickly, student loan forgiveness is now a thing of the past, and borrowers are bracing as their loans become a potential reconciliation target.

“We really see this as an attack on students and working families with student loan debt. We've seen an array of really problematic proposals that are on the table for congressional Republicans,” said Aissa Canchola Bañez, policy director for Student Borrower Protection Center.

"Many of these would cause massive spikes for families with monthly student loan payments,” she added.

The House and Senate are working on competing massive legislative packages to fund the government and advance President Trump's agenda, with the lower chamber aiming to vote on its budget reconciliation resolution as soon as Tuesday. With a slim majority, Speaker Mike Johnson (R-La.) can afford few defections.

House Republicans had over a dozen proposals on the table in a January memo about how to cut higher education costs, with some considered more likely to come to pass than others.

One that is seen as probable is the death of the Biden-era Saving on Valuable Education (SAVE) income-driven repayment (IDR) plan, which the 8th U.S. Circuit Court of Appeals ruled to block last week.

Along with ending the SAVE plan, which dropped some borrowers' payments down to $0, Republicans want to streamline other IDR plans down to two options for loans that began after June 30 of last year. Lawmakers estimate this would save $127.3 billion in 10 years.

An analysis by the Institute for College Access and Success showed the average payment by student borrowers could go up by almost $200 under this proposal.

Republicans have been split over the reconciliation package, as moderates in the party are concerned about potential changes to Medicaid and others are worried about covering all the tax cuts in the bill; the House is aiming for $2 trillion in spending cuts.

“There’s a couple of folks who just have lingering questions, but I think all those questions can be answered and we’ll be able to move forward,” Johnson told reporters.

The Senate passed its own budget resolution last week, though it has not released specifics on higher education cuts yet.

Lawmakers face a March 14 deadline to fund the government.

House Republicans are also considering pulling back some regulatory authority from the Department of Education so the agency could no longer propose sweeping student loan cancellations without congressional approval.

The shift toward potentially raising borrowers' payments is a far cry from the last four years, but conservatives who objected to President Biden's efforts at student debt relief say they are eager to get back to the system as it should be.

“Our big concern with the student loan programs was it [...] wasn't done through Congress, where it wasn't a matter where the people's representatives had an opportunity” to weigh in, said Patrick Wright, vice president for legal affairs at the Mackinac Center for Public Policy, a group that sued the Biden administration for forgiving student debt for 800,000 borrowers. "It was a single person in a single branch the government attempting to subvert the democratic process."

“My understanding is that there's 45 million people that have student loans, which means that there's 45 million different experiences on the process,” Wright said. “There was a law involved with these loans, and if Congress decides, in the future, going forward, that they are going to offer some sort of relief, and that's gone through the democratic process .... but complaints based off of illegal actions taken by the previous presidential administration, those are not something that people should have been able to rely upon.”

Some of the programs under fire were created with bipartisan support, such as Public Service Loan Forgiveness (PSLF), which gives debt relief to teachers, police officers and others in public service after 10 years of payments.

Republicans want to make some reforms to the program including limiting who is eligible.

Lawmakers are also looking at other options such as adding limits to how much students can borrow, limiting who can apply for loan discharges under Borrower Defense, canceling Parent Plus loans, establishing risk-sharing payments for colleges, eliminating interest capitalization and reforming Pell Grants.

“I think borrowers are concerned," said Natalia Abrams, president and founder of the Student Debt Crisis Center, adding she is reminding borrowers “we don’t know what’s going to happen.”

“We understand their fears, but things like Public Service Loan Forgiveness in the past have had bipartisan support. It's hard to know where that will go. What will it be like? Will they grandfather existing folks to the programs or not? It's just a very concerning time for borrowers,” she added.

With all the changes that could occur to the system — not to mention President Trump seeking to shut down the Education Department entirely — student loan advocates are pushing borrowers to document their payments to ensure they can prove progress on their loans.

“Borrowers should document and take screenshots their studentaid.gov, their servicer page,” Abrams said. “This is not that we necessarily think they're going to take down the department's website. It's more that if anything goes haywire with your account, you can prove, especially with the IDR tracker, where you were at. If you've been working in a public service job but haven't gone and filled out the PSLF Help tool, that's something you can do to help potentially safeguard yourself. We don't know anything for sure but enroll if you've been thinking about enrolling in a program.”

She added it is important for borrowers to join programs that were established legislatively, such as income-based repayment instead of income-contingent repayment, as they may be more likely to survive.

“The other thing is advocacy. Call your senators, call your members of Congress, send a letter, if you have the ability to show up at a local office, share your student loan story. They need to hear from folks and advocacy does work,” Abrams said.

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