A sweeping new Senate proposal could dramatically reshape the way Americans borrow, repay, and even qualify for forgiveness on student loans. If you’re a current borrower—or thinking about grad school, medical school, or borrowing for your child—this bill could hit your wallet hard.
The legislation, quietly embedded in a broader GOP spending bill, promises to simplify the confusing loan system. But behind the simplification are tougher borrowing limits, fewer repayment options, and stricter rules that could leave millions of students and parents paying more—and for longer.
What the Senate Bill Actually Changes
1. Most Repayment Plans Would Be Eliminated
The bill proposes collapsing all existing income-driven repayment plans (like SAVE, PAYE, and ICR) into just two options:
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A traditional fixed repayment plan (like the standard 10-year plan).
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A new Repayment Assistance Plan (RAP), which bases your monthly payment on income (ranging from 1% to 10%) with forgiveness after 30 years—but only if there’s still a balance.
While this sounds simpler, it means fewer paths to quick forgiveness. And under RAP, while unpaid interest won’t grow your loan balance, you’re likely paying for decades.
2. Grad PLUS and Parent PLUS Loans Would Be Capped—or Cut Completely
One of the most controversial parts of the bill is its plan to eliminate Graduate PLUS loans entirely—currently a key source of funding for law, medical, and grad school students.
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Graduate students would be limited to borrowing $50,000 per year, with a lifetime cap of $200,000.
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Parent PLUS loans would be capped at $20,000 per child, per year—a significant drop from current limits.
Without these federal loan options, many families may be forced to turn to private lenders, which typically offer fewer protections and higher interest rates.
3. Forgiveness Stays for Public Service—But with Fewer Protections Elsewhere
The bill keeps Public Service Loan Forgiveness (PSLF) intact—and even allows time spent in medical and dental residencies to count toward it again, which is good news for future doctors.
But it removes economic hardship and unemployment deferments for future borrowers. That means if you lose your job or can’t afford to pay, you may no longer be able to pause your loans.
Who’s Affected—and How Badly?
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Graduate students in medicine, law, and education: You’ll face borrowing caps that likely won’t cover the full cost of attendance. That pushes many toward risky private loans.
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Parents trying to help kids through college: With capped PLUS loans, you might not be able to borrow enough—and federal protections disappear if you go private.
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Current borrowers on SAVE or PAYE: You could be forcibly moved to RAP. If you’re low-income, this might mean higher monthly payments and longer repayment terms, possibly delaying forgiveness by a decade or more.
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Low-income borrowers and first-gen students: While RAP offers lower payments, its 30-year timeline is a heavy burden. You might end up paying less per month but far more over time.
Why This Bill Is So Controversial
Senate Republicans backing the plan say it’s about curbing runaway debt, especially at graduate and professional schools, where borrowing can exceed $200,000. They argue that students and colleges should share more of the financial responsibility.
But critics warn it could widen inequality, leave future doctors and lawyers underfunded, and push millions into private loan traps. There’s also concern that with fewer deferment options and slower forgiveness, the bill penalizes low-income borrowers the most.
Some advocacy groups argue this is an indirect way of ending the Biden administration’s SAVE Plan, which has helped reduce payments and speed up forgiveness for millions.
What Borrowers Should Do Now
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If you’re in SAVE or PAYE: Track the bill’s progress—your plan could be phased out.
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Planning grad school? Consider how you’d fund it without Grad PLUS.
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Parents: Recalculate what you can afford to borrow under a $20,000/year limit.
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Working in public service or medicine: PSLF protections stay—but read the fine print carefully.
Bottom Line
This isn’t just a student loan tweak—it’s a full-scale remodel of the borrowing system. If passed, the Senate’s bill would cut access to major loan programs, limit forgiveness, and stretch repayment timelines—especially for parents and graduate students.
For now, this bill is still working its way through the legislative process, but the stakes are clear: millions of borrowers could see their repayment plans upended by the end of the year.
