Senate GOP Student Loan Plan May Trigger Wave of Defaults, Experts Warn

A Senate Republican proposal to overhaul student loan repayment could lead to a dramatic increase in borrower defaults, according to higher education advocates.

Sameer Gadkaree, president of The Institute for College Access & Success, cautioned that the higher education provisions in the Senate GOP’s reconciliation bill “would cause widespread harm to American families” by “making student debt much harder to repay” and “unleashing an avalanche of student loan defaults.”

American flag | Source: Pexels

The bill, introduced by the Senate Committee on Health, Education, Labor and Pensions on June 10, outlines changes for federal student loan borrowers taking loans after July 1, 2026. It narrows repayment options to two plans: a revised standard repayment plan and a new income-based plan called the Repayment Assistance Plan (RAP).

Under the standard plan, repayment durations would vary from 10 to 25 years, depending on the loan balance, with borrowers owing more than $100,000 repaying for 25 years. RAP payments would range from 1% to 10% of a borrower’s income, with a $10 monthly minimum and loan forgiveness only after 30 years.

Consumer advocates, including Gadkaree, argue the structure could extend repayment periods and intensify debt burdens. Education expert Mark Kantrowitz noted many low-income borrowers may remain in repayment for the full 30-year term.

The White House | Source: Pexels

An analysis by the Student Borrower Protection Center estimates that typical borrowers could pay $2,929 more annually under RAP than under the Biden administration’s now-blocked SAVE plan.

More than 42 million Americans hold federal student loans totaling over $1.6 trillion. As of April, over 5 million borrowers were already in default.