GOP plans to repeal student loan forgiveness in new bill

In the United States, discussions around student loan forgiveness have gained significant attention recently. A prominent Republican lawmaker has proposed that a repeal of time-based student loan forgiveness under income-driven repayment plans could be included in an upcoming reconciliation bill expected to be considered early next year. This proposal aligns with the party's agenda as they prepare to take control of the White House and both chambers of Congress for the first time in several years, albeit with narrow majorities. This opportunity allows them to leverage the budget reconciliation process to advance legislation, including changes to existing student loan forgiveness options. Echoing the sentiments of the Republican Party, the proposed College Cost Reduction Act seeks to eliminate current income-driven repayment (IDR) plans for new borrowers. Traditionally, borrowers could have their remaining student loan balance forgiven after 20 or 25 years of repayment under these plans. Under the new proposal, federal student loan repayment options would be limited to a Standard plan or a new IDR plan called the Repayment Assistance Plan. The latter would still aim to assist borrowers based on income but would eliminate the pathway to forgiveness after a set repayment period. Instead, borrowers would need to pay back the total principal and interest they would have owed under a standard repayment plan, which many lower-income borrowers might find unattainable. The changes stipulated in the proposal would take effect for loans made after July 1, 2024, suggesting existing borrowers in repayment would not see immediate impact on their current IDR plans. However, the implications of the proposed changes could potentially trap some borrowers in lifelong debt if they struggle to meet the new repayment requirements. This is particularly concerning given the broader context of existing student debt burdens faced by millions of Americans and the recent court actions affecting other student loan forgiveness regulations. In addition to repealing time-based forgiveness options, the College Cost Reduction Act would also include provisions to eliminate the Parent PLUS and Graduate PLUS loan programs, which have come under scrutiny. Some advocates argue that repealing these programs could push borrowers towards riskier private loans that do not offer protections, such as IDR or loan forgiveness. Besides, the proposal seeks to introduce an interest subsidy for the new IDR plan and restrict future administrations from instituting new regulations that might expand student loan forgiveness. Ultimately, the fate of these elements remains uncertain, as Republican lawmakers continue to debate the structure and content of the upcoming reconciliation bill.