Senate Republicans on Saturday narrowly voted to advance the megabill containing President Donald Trump’s main domestic priorities, including sweeping tax cuts. And included in the bill are major reforms to federal student loan repayment plans and loan forgiveness programs – but with some notable changes.
The package cleared an important procedural hurdle on a 51 to 49 vote on Saturday night, with two Republican joining all Democrats to oppose the bill. The narrow success now allows the bill to advance to the Senate floor for a more extended debate, which could culminate in the bill’s passage as soon as Monday.
GOP lawmakers made some changes to the student loan provisions of the bill after a key Senate official ruled that some elements did not comply with the chamber’s reconciliation rules that allow bills to bypass the filibuster and pass the chamber with a simple majority. While the legislation would still make major reforms to federal student loan programs, the tweaks that lawmakers made are noteworthy. Here’s a breakdown of the changes.
Repeal Of Student Loan Repayment Plans For Current Borrowers
Prior Version: The original version of the Senate reconciliation bill would have repealed the Income-Contingent Repayment, Pay-As-You-Earn, and Saving On A Valuable Education plans for current borrowers shortly after its enactment. These are three popular income-driven repayment plans that provide borrowers with affordable payments based on their income and family size, with student loan forgiveness after 20 or 25 years. The bill would have preserved the Income-Based Repayment, or IBR, plan, and moved current borrowers enrolled in these plans into a modified version of IBR. The Senate parliamentarian had ruled that these provisions governing current student loan borrowers violated senate reconciliation rules.
New Version: The updated Senate bill would still repeal ICR, PAYE, and SAVE, and move these borrowers into a modified version of IBR, which could increase their monthly payments. However, it would delay implementation. New loans taken out on or after July 1, 2026 would not be eligible for existing IDR options, but current borrowers enrolled in ICR, PAYE, or SAVE would not have to be moved into IBR until 2028. The revised bill would also preserve a newer, more affordable version of IBR for borrowers who first took out student loans on or after July 1, 2014, allowing some borrowers to maintain lower monthly student loan payments.
Student Loan Repayment For New Borrowers
The updated Senate bill makes no significant changes to the Repayment Assistance Plan, which would be the only income-driven repayment option for borrowers who take out loans on or after July 1, 2026. RAP would feature a tiered repayment formula that increases the percentage of income that must be dedicated to a borrower’s monthly student loan payments as their earnings rise.
Borrowers would be entitled to student loan forgiveness after 30 years in repayment under RAP – far longer than existing income-driven options. However, RAP would also qualify for PSLF, allowing for student loan forgiveness in as little as 10 years for qualifying borrowers.
Student Loan Forgiveness For Doctors And Dentists
Prior Version: The earlier Senate bill would have eliminated student loan forgiveness eligibility under the Public Service Loan Forgiveness program for medical and dental residents, essentially depriving new doctors and lawyers of PSLF credit during their lowest-earning years when they would most likely be working in qualifying nonprofit or public employment. The parliamentarian had determined that this provision violated Senate reconciliation rules.
New Version: The current version of the Senate bill that cleared the procedural hurdle on Saturday drops this provision entirely. So, prospective doctors and dentists would be able to continue counting their residencies toward student loan forgiveness under PSLF.
Student Loan Plans For Parent PLUS Borrowers
Prior Version: The original bill would have repealed ICR – the only income-driven repayment plan available to Parent PLUS borrowers – and prevented Parent PLUS borrowers from accessing any other student loan repayment plan tied to their income. The only exception would be for Parent PLUS borrowers who had already consolidated their loans and enrolled in ICR at the time of the bill’s enactment. The parliamentarian had ruled that this provision did not comply with reconciliation procedures.
New Version: The updated bill would still repeal income-driven repayment for Parent PLUS borrowers, but it would expand and relax the exception. Parent PLUS borrowers would have until July 1, 2026 to consolidate their loans via the Direct loan program, and until June 30, 2028 to enroll in the ICR plan (after which, under the terms of the bill, they would be moved to IBR). The bill would also expand the exception to include double-consolidated Parent PLUS loans that are enrolled in other income-driven plans like IBR, PAYE, or SAVE.
Student Loan Forgiveness For School Misconduct
Prior Version: The earlier version of the Senate bill would have repealed Biden-era regulations that had made it easier for borrowers to qualify for two federal student loan forgiveness programs: Borrower Defense to Repayment, which covers certain types of school misconduct and fraud, and Closed School Discharges, which provide relief when a borrower’s school closes during their enrollment.
New Version: The updated Senate bill still effectively repeals these Biden-era rules for the student loan discharge programs. However, it technically delays implementation of these rules for 10 years, rather than outright repealing them. This would give the Department of Education a window of time to unwind the regulations through its rulemaking process.
What Come Next For Student Loan Reforms
The Republican-led reconciliation legislation still must go through several additional steps before the bill, and the associated reforms to student loan repayment and loan forgiveness programs, will be final. The Senate will be engaged in lengthy debate throughout the day Sunday, and Democrats have forced the Senate clerk to read every line of the nearly 1000-page bill on the Senate floor before debate can even begin. Because Republicans are trying to pass the legislation through budget reconciliation, it will only need a simply majority of 51 votes to pass. Republicans hold 53 seats, plus the vice presidency for tie-breaking votes.
Once the Senate officially approves the bill, which could happen as soon as Monday, it will need to be sent back to the House of Representatives for final approval. It is possible that additional changes to elements of the bill, including the provisions that impact student loan programs, could see further revisions. President Trump has said he wants to the bill on his desk by July 4th.
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