Republican Student Loan Bill Proposes Major Overhaul, Raises Concerns over Borrower Hardship

A sweeping Republican proposal to reform the federal student loan system has sparked alarm among consumer advocates, who warn that the plan would significantly increase repayment burdens and prolong debt for millions of borrowers.

The "One Big Beautiful Bill Act," advanced by House Republicans in May and currently under review by the Senate Health, Education, Labor and Pensions (HELP) Committee, aims to streamline repayment options and cut federal spending on student loans. The Senate version, unveiled June 10, is part of a larger budget package now awaiting debate.

The Capitol Building | Source: Pexels

Sen. Bill Cassidy (R-La.), HELP Committee chair, said the legislation would relieve taxpayers from subsidizing student loan repayments. “Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college,” Cassidy stated, estimating the bill would save $300 billion.

Key provisions include reducing repayment plan options to two — a fixed-payment plan and a new income-driven “Repayment Assistance Plan” (RAP) — potentially increasing yearly costs for borrowers. A Student Borrower Protection Center analysis suggests that college graduates could pay an additional $2,929 annually under RAP compared to the Biden administration’s now-blocked SAVE plan.

The proposal also extends loan forgiveness timelines. Borrowers could face up to 25 years of payments under the fixed plan, or 30 years under RAP before receiving debt cancellation — a change critics say will result in “an explosion of senior debtors,” according to Astra Taylor, co-founder of the Debt Collective.

American flag | Source: Pexels

Additionally, the bill would eliminate deferment options for unemployment and economic hardship, removing a critical safety net. “Without them, borrowers… will likely enter delinquency and eventually default,” said Michele Zampini of The Institute for College Access & Success.

The legislation continues to generate debate as Senate lawmakers prepare for further negotiations.