By JAMES CIRRONE FOR DAILYMAIL.COM
House Republicans have unveiled their plan to change how millions of Americans pay back their student loan debt.
The move, which will upend Obama and Biden-era policies, comes as the Trump administration has vowed no ‘mass loan forgiveness’. The administration is also gearing up to garnish people’s wages starting May 5 if they have defaulted on their student loans.
The GOP framework officially repeals former President Joe Biden‘s SAVE plan, which offered lower monthly payments than any other income-driven repayment plan.
House Republicans have unveiled their plan to change how millions of Americans pay back their student loan debt.
It also massively simplifies how people repay federal student loans. According to higher education expert Mark Kantrowitz there are currently 12 ways to make payments on student loans, some of which are holdovers from the Obama administration.
Republicans want to narrow it down to two options. Under their plan, borrowers would be able to pay back their debt with fixed payments over the next 10 to 25 years, or through a new income-driven repayment plan called the ‘Repayment Assistance Plan.’
Under RAP borrowers’ monthly payments would be set as a share of their income. For instance, if someone makes between $10,000 and $20,000, they would be obligated to pay 1 percent of that toward their loans.
At the higher end of the scale people with incomes of $100,000 or more would have to pay 10 percent.
Students who took out loans before July 1, 2026, will still have access to the myriad of repayment plans. The new changes Republicans are proposing will only affect people who take out loans after that date.
Trump administration has vowed no ‘mass loan forgiveness’ and is gearing up to garnish people’s wages starting May 5 if they have defaulted on their student loans
Economist Jason Delisle, a nonresident senior fellow at the Urban Institute, recently put together his best estimate of what a single-person household would end up paying every month.
Delisle compared the House Republican concept to the income-based repayment plan passed under former President Barack Obama.
People making $30,000 all the way up to $70,000 would actually pay less each month under the GOP plan, according to Delisle.
The only groups who would have to pay more are those bring in no income, those who make $20,000 a year and people who earn upwards of $100,000.
The Republicans also want to put strict caps on how much individuals can take out in debt, limiting undergraduates and graduate students to $50,000 and $100,000, respectively.
Not only that but colleges and universities will be required to pay ‘a portion of their students’ unpaid loans based on how much of a return on investment the degree provided.’
The legislation came out of the House Committee on Education and Workforce, chaired by Rep Tim Walberg (R-Mich), and is set to be included in the massive reconciliation bill that is still taking shape.
Reconciliation is a legislative process that allows certain bills to pass in the Senate with just a 51-vote majority, bypassing the filibuster which requires a 60-vote supermajority.