Senate Republicans on Tuesday passed landmark legislation that would make the most significant changes to federal student loan programs in decades. Nearly every student loan borrower currently in repayment, as well as current and prospective students, will feel the impacts. Critics have argued that the massive reforms will raise costs for millions of people.
“Lawmakers have chosen to plunge their constituents into economic uncertainty by removing a majority of the remaining protections and programs that exist for Americans with student loan debt,” said Student Debt Crisis Center Executive Director Sabrina Calazans in a statement on Tuesday. “If this bill is signed into law, students, borrowers, parents, and families will see a direct hit to their pocketbooks and, as a result, there could be a mass wave of defaults.”
The student loan reforms were embedded in the huge megabill that congressional Republicans have been working on for months to enact President Donald Trump’s key legislative priorities, including substantial tax cuts partially offset by cutting government spending. Senate Democrats unanimously rejected the bill, arguing that it would cause millions of vulnerable Americans to lose access to healthcare, increase the cost of living, and balloon the federal deficit.
Lawmakers in the Senate made some last-minute changes to the student loan provisions of the megabill after several proposed reforms were struck down by a senate official as violating the chamber’s reconciliation rules. Here’s a breakdown of the final version of the bill that has now officially passed the Senate, and what it means for borrowers, students, and college-bound families.
Changes To Student Loan Repayment
The legislation would reshape the federal student loan repayment system for nearly every borrower currently in repayment:
- Several popular income-driven repayment plans – ICR, PAYE, and SAVE – would be phased out starting next year. Between July 1, 2026 and July 1, 2028, borrowers enrolled in these plans would be given the choice to switch to a modified version of the IBR plan, or a new Repayment Assistance Plan (RAP, for short). Advocacy organizations have warned that many borrowers, particularly those currently enrolled in PAYE and SAVE, would experience higher monthly payments following the transition.
- New student loan borrowers as of July 1, 2026 would only have access to two repayment plans: a Standard plan, with a term of 10 to 25 years depending on the loan balance, or RAP, which allows for student loan forgiveness only after 30 years of payments (far longer than any other current plan).
Senate Republicans made some last-minute changes to the bill after several provisions impacting current student loan borrowers were struck down by the parliamentarian. The revised version of the bill offers a more generous transition period for borrowers who would lose access to their current repayment plan. It also provides more flexibility for current Parent PLUS borrowers, who would have one year to consolidate their loans and a bit longer to enroll in an income-driven repayment plan to ultimately be grandfathered in and maintain access to the IBR plan and Public Service Loan Forgiveness, or PSLF. In addition, revisions to the RAP plan would allow married borrowers to exclude their spouse’s income by filing separate tax returns – a significant change given that the prior version of the senate bill had excluded this language.
Changes To Student Loan Forgiveness And Discharge
The megabill also makes some notable changes to student loan forgiveness for both current and prospective borrowers:
- Current student loan borrowers eligible for IBR would maintain their student loan forgiveness timeline on a 20- or 25-year term. Payments made under other income-driven repayment plans would count toward IBR loan forgiveness. The bill would also maintain a newer, more affordable version of IBR for borrowers who first took out their student loans on or after July 1, 2014.
- Current and prospective borrowers who enroll in RAP would have a repayment term of 30 years before they could qualify for student loan forgiveness. Payments made under other IDR plans, as well as the Standard and Alternative repayment plans, and certain periods of deferment and forbearance, could count toward RAP loan forgiveness.
- Regulations enacted under the Biden administration that would ease and expand access to school-based student loan discharge programs (such as if a school closes during a student’s enrollment, or an institution makes material misrepresentations to a prospective student) would be delayed for 10 years. The original Senate bill would have outright repealed these regulations, but such a lengthy delay may have the same ultimate effect for many student loan borrowers.
Senate Republicans have largely kept the Public Service Loan Forgiveness program intact, and RAP would explicitly be a qualifying repayment plan for PSLF under the revised bill. Lawmakers dropped a provision that would have eliminated PSLF eligibility for medical and dental interns and residents after an objection by the parliamentarian.
However, the Department of Education is separately moving forward with a rulemaking process to limit student loan forgiveness eligibility under PSLF based on an employer’s activities. Critics have argued that any attempt by the department to adversely change the rules for PSLF without congressional authorization would be illegal.
Changes To Student Loan Disbursement
The bill doesn’t just impact current student loan borrowers in repayment. It would also result in significant changes to federal student aid disbursements, which would hit prospective students and college-bound families:
- The bill would eliminate the Graduate PLUS program, a federal student loan program for graduate and professional students that allows borrowers to cover up to the total cost of their attendance.
- The bill would cap graduate-level Stafford loans at $20,500 per year (with a $100,000 lifetime limit) and professional-level Stafford loans for law and medical school at $50,000 per year (with a $200,000 lifetime limit). Critics have argued that this will force many prospective medical and law students to rely more heavily on risky private student loans, or they may forego an advanced degree altogether, exacerbating shortages of doctors in rural areas and attorneys in low-paying prosecutorial and public defense roles.
- Parent PLUS borrowing would be capped at $65,000 – no changes from the prior version of the Senate bill, and only slightly higher than the $50,000 cap provided in the House version of the legislation. New Parent PLUS loans would be ineligible for any income-driven repayment plan option, and would effectively be cut off from most student loan forgiveness programs, including PSLF.
Other Changes To Student Loan Programs
The legislation makes a number of other changes to federal student loan programs:
- The bill would eliminate economic hardship and unemployment deferment options, leaving distressed student loan borrowers only with the ability to modify their payments under income-driven repayment plans during times of hardship. RAP, unlike all other income-driven repayment plans, always has a minimum monthly payment requirement, even for borrowers earning no income at all, which critics have said will lead to a spike in defaults for the most vulnerable student loan borrowers.
- Discretionary forbearances would be restricted to no more than 9 months during any 24-month period. Currently, borrowers have up to 36 months of forbearance available, which can be used for up to 12-months at a time, with no prohibition on consecutive forbearances.
- The bill would allow borrowers to rehabilitate defaulted federal student loans twice. Under current law, borrowers have only one shot at loan rehabilitation. However, the minimum required monthly rehabilitation payment amount would double, from $5 per month to $10.
All of these changes to federal student loan programs are significant, but not necessarily final. The megabill now heads back to the House, where it faces an uncertain fate. The House could approve or reject elements of the Senate bill, or make further modifications to its provisions. So borrowers may need to buckle up for more uncertainty about loan repayment and student loan forgiveness.
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