Republicans on the House Education and Workforce Committee have just revealed their own bold alternative. Their mission is to fundamentally reform the country’s student loan and financial aid system. Beginning July 1, 2026, this proposal will only affect new borrowers. It advances some of the most consequential updates, like capping federal student borrowing and offering fewer repayment plans. The decision follows recent calls from Congress to focus on systemic problems with student debt as college costs continue to increase.
The blueprint suggests capping federal student loans at $50,000 for undergraduates and $100,000 for graduates. Mark Kantrowitz, an expert on student financial aid, cautioned that these new limits could force some borrowers into private student loans. These loans are often predatory, with higher interest rates and more stringent repayment expectations. As of September 2024, over 12 million people were enrolled in income-driven repayment (IDR) plans. These plans improve the manageability of monthly payments by capping them at 10% of discretionary income.
Chairman Tim Walberg, R-Mich., is chairman of the House Education and Workforce Committee. He offered a defense of the proposal by claiming that past congressional action has failed to address the root causes of student debt.
“For decades Congress has responded to the student loan crisis by throwing more and more taxpayer dollars at the problem — never addressing the root causes of skyrocketing college costs.” – Tim Walberg, R-Mich.
There’s one especially big and controversial change in the current plan. Beginning in July 2025, it will rescind unemployment deferment and economic hardship deferment for federal student loan borrowers who incur debt. Advocates for borrowers who can find themselves with sudden financial shocks in the course of decades-long repayment windows worry that this change will leave them without options.
The federal Pell Grant program, established in 1965, has been the bedrock of financial aid. It is one of the federal government’s largest sources of funding for college students today. In 2020, nearly one-third of undergraduates, or more than six million students, were Pell Grant recipients. Increasing these grants would provide critical assistance to low-income students. The maximum Pell Grant award should be increased to $7,395 for the 2025-26 award year. Advocates of the fragile recovery say that the new proposal imperils education access for thousands of students.
Sameer Gadkaree, president and CEO of The Institute for College Access & Success. He was terribly opposed to the plan of the committee. He predicted this would cripple college access. This would occur by drastically undercutting critical aid programs and repealing key consumer protections.
“The committee’s current proposal would severely restrict college access by slashing financial aid programs, eliminating basic consumer protections and making it harder to repay student loan debt.” – Sameer Gadkaree
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