House Republicans are embarking on wholesale changes that could shake up the way students pay for college, advancing a conservative agenda to curtail the federal role in education financing.
If new proposals from the Republicans stand, the changes could make borrowing for college more expensive and limit who can get Pell Grants, which deliver vital financial aid to lower-income households. The legislation would restrict access to college financial aid, lowering loan limits for parents and some students.
Republicans, who control both chambers of Congress with slim margins, are fleshing out plans to implement President Donald Trump’s agenda on taxes, energy and immigration through budget reconciliation — a process that would allow a bill to pass without any Democratic votes in the Senate. House committees are crafting the legislation, with a target of at least $1.5 trillion in spending cuts over 10 years.
The House Committee on Education and the Workforce unveiled its contribution to the budget package Monday and scheduled an internal vote on the bill for Tuesday.
The 103-page legislation delivers on some long-standing promises to simplify and streamline federal education lending. It largely mirrors the College Cost Reduction Act that created a road map for remaking the federal student aid program. Yet, it goes further by curbing access to the largest federal grant program for low- and middle-income students: Pell Grants.
The bill could face changes when Senate Republicans come to the negotiating table. It cuts more than $330 billion to support Trump’s tax cuts but is full of sweeping policies that some higher-education experts say are best-suited for a reauthorization of the Higher Education Act.
Here are some highlights of the bill:
The House GOP bill would end the Plus loan program for graduate students and get rid of subsidized loans that require the government to pay undergraduate borrowers’ interest while they are in school on or after July 1, 2026. To mitigate the impact on current college students, Republicans include a three-year exception for borrowers enrolled as of June 30, 2026.
The legislation also increases the aggregate borrowing limit for dependent undergraduates from $31,000 to $50,000 and radically changes the annual cap. Instead of using one universal cap that increases from one school year to the next, the bill calls for annual borrowing limits to be based on the median cost of a student’s academic program. That means an engineering major and an English major could have different annual loan limits.
The median cost would be determined annually by the education secretary using data on the same programs at all colleges and universities across the country.
“There is a lot of complexity being introduced here,” said Jill Desjean, senior policy analyst at the National Association of Student Financial Aid Administrators (NASFAA). “It makes it harder for students to know what it’s going to cost and to plan ahead.”
The bill also imposes new aggregate loan limits for advanced degrees, while ending the Plus program that allows graduate students to borrow up to the full cost of attendance. People pursuing a master’s degree could borrow no more than $100,000, while those seeking to become a doctor or lawyer could take out no more than $150,000 from the federal government.
Republicans say imposing borrowing limits on graduate programs could force institutions to lower their costs. But the restrictions may simply drive more students to the private lending markets, where there are fewer consumer protections, said Jon Fansmith, senior vice president for government relations at the American Council on Education (ACE).
While the legislation maintains the Parent Plus program — one of the only parts of the federal aid program that makes the government money — it adds new restrictions. Parents would be able to take out federal loans only if their child borrows the maximum annual amount and still needs help to cover the remaining costs.
The bill imposes an aggregate limit of $50,000, instead of letting parents borrow up to the full cost of attendance.
Instead of continuing several repayment options for student loans, the GOP bill would whittle them down to two: one standard 10-year plan and one income-driven repayment (IDR) plan.
Folding the four current IDR plans into one would effectively end President Joe Biden’s Saving on a Valuable Education plan, which has been tied up in court since last year. Higher-education experts say congressional Republicans want to end SAVE through reconciliation, rather than the courts, to use the savings to offset Trump’s tax cuts. And with the case stalled in the courts, they might get their way.
The new standard plan would be tiered. Borrowers with an outstanding principal of less than $25,000 would repay the debt for no more than 10 years; those with $25,000 to $50,000 for no more than 15 years; $50,000 to $100,000 for no more than 20 years; and more than $100,000 for no longer than 30 years.
Payments on the new IDR plan would be based on a borrower’s total adjusted gross income, ranging from 1 to 10 percent depending on earnings, and include a $5o deduction per dependent child. Borrowers would have to make a minimum monthly payment of $10, ending the zero-dollar payment option for low-wage borrowers.
Enrollees in the IDR plan who stay on top of their monthly payments would have their unpaid interest waived to prevent negative amortization, which happens when payments are not enough to cover the principal and interest.
“You have people complaining about their loans right now that they feel like they’ve been paying forever and ever and their balance just keeps going up. This plan fixes that,” said Preston Cooper, a senior fellow at the American Enterprise Institute (AEI), a conservative think tank.
The plan, however, puts loan forgiveness further out of reach. Instead of forgiving the remaining balance after 20 or 25 years of payment, the new IDR option would extend the term to 30 years. It also ends policies that let struggling borrowers postpone their payments through economic-hardship and unemployment deferments, but only for people who take out loans on or after July 1, 2025.
“Across the board, they are making repayment significantly more expensive and more difficult,” said Jessica Thompson, senior vice president at the Institute for College Access & Success. “This could reduce the number of people who enroll.”
Eligibility for the Pell Grant for undergraduates with exceptional financial need would be curtailed under the GOP legislation. Students would no longer receive the grant if they are taking fewer than six credit hours. That means a student who needs one class to graduate or can afford to take only one class a semester would be shut out of using Pell to cover the cost, said Desjean, of NASFAA.
The proposal also increases the number of credits required for students to receive a maximum Pell Grant from 12 to 15 credits per semester. That would cut the maximum Pell Grant by $1,479, from $7,395 to $5,916, for those students registered for only 12 credit hours and impact about a quarter of Pell recipients, according to an analysis by the National College Attainment Network.
“While we support initiatives to reduce the time it takes for students to attain a degree, this approach may jeopardize time to completion for students who work part time,” said Kim Cook, chief executive of the National College Attainment Network. “By increasing students’ unmet financial need, this proposal will also drive up student borrowing for millions.”
The bill would also curb Pell access for families that have lots of assets but appear to have little income in the calculation of the Student Aid Index, or SAI — a figure used to determine a student’s ability to pay for college and the amount of aid they receive.
As it stands, a student can qualify for Pell even when their family has a lot of assets if their parents generate business losses that lower their adjusted gross income. The House bill would make students with an SAI that is equal to or exceeds twice the amount of the maximum Pell award ineligible, regardless of their adjusted gross income.
At the same time, the bill expands eligibility for Pell to students enrolling in short-term programs that range from eight to 15 weeks in duration, a policy that has bipartisan support but also draws criticism from higher-education experts who worry that unscrupulous schools could take advantage.
House Republicans would also provide $10.5 billion to stave off a looming funding shortfall in the Pell Grant program.
The bill would require colleges and universities to make payments to the government based on a share of education debt held by former students who are delinquent on their loans. The payment would be based on the total price the institution charges students for a program of study and the earnings of students after they leave school.
“Colleges have ridden this gravy train of taxpayer dollars without any accountability for the quality of the education they provide or whether students can find jobs when they graduate,” Rep. Tim Walberg (R-Michigan), chairman of the House Education Committee, said in a statement Monday. “This plan brings accountability and holds schools financially responsible for loading students up with debt.”
Proceeds from the payments would help fund a performance-based grant for colleges to keep costs down for students. Colleges could receive up to $5,000 per federal student-aid recipient if they keep tuition low, graduate low-income students and produce strong earnings outcomes, according to the bill.
Higher education experts worry that the risk-sharing proposal could do more harm than good, especially at institutions that enroll large numbers of students with the least resources.
“Risk-sharing is bad policy,” said Fansmith, of ACE, which represents colleges and universities.
Cooper, of AEI, said the grants could offset the unintended consequences of risk-sharing by “giving schools that are doing a good job serving low-income students extra resources to carry out that mission while preserving incentives for colleges not to load students up with unreasonable debt.”
The GOP proposes curbing or ending policies designed to prevent colleges from taking advantage of vulnerable students.
It would get rid of the gainful-employment rule that cuts off federal student aid to vocational programs whose graduates consistently have high loan payments relative to their income. It also would end the 90/10 rule, which bars for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding.
“We’re leaving students at much higher risk of being exploited by the industry, making loans more expensive, reducing access to grants,” Thompson said. “This bill could drag us back 50 years by restricting access to higher education to people who have financial means.”
