Major Student Loan Reforms Move One Step Closer to Becoming Law

Congress is on the brink of a major overhaul in how Americans finance their college education. On June 10, Republican senators introduced their version of the higher education section in President Trump’s sweeping “One Big Beautiful Bill Act.” The 71-page proposal outlines big shifts—from setting tighter student loan caps to eliminating many existing repayment plans.

Limits

Unlike the more aggressive House version introduced in April, the Senate bill softens several proposed cuts while still signaling significant reform. One of the standout provisions is the introduction of new caps on student loans, particularly affecting graduate students and parents. The Senate proposal pulls back from the harsher borrowing limits in the House version, a move that education policy experts welcomed as a reasonable compromise.

Ben Cecil of the think tank Third Way said the new limits were more balanced, offering a path forward that still ensures fiscal control without punishing students outright.

Plans

A big focus of the legislation is student loan repayment plans. The bill proposes cutting down the number of repayment options to just two. This would wipe out existing plans like President Biden’s SAVE program, which has been praised for affordability but has faced court battles and has left about 8 million borrowers in forbearance.

Under the Senate’s approach, while simplification might help some borrowers navigate repayment, critics worry it could eliminate options that were designed to be more flexible and income-driven.

Reactions

Financial aid advocates are cautiously optimistic. Melanie Storey, president of the National Association of Student Financial Aid Administrators, said she was relieved that some of the “most harmful” aspects of the House proposal didn’t make it into the Senate version.

However, she warned that the changes could push students toward risky private loans, which aren’t available to everyone and often come with fewer protections.

Grants

Pell Grants were another major point of debate. These federal grants help low-income students attend college. The House version of the bill would’ve tightened eligibility by increasing required credit hours, potentially cutting off support for millions. The Senate version dropped that idea and instead targeted high-income recipients to tighten eligibility.

But there’s controversy here too. Critics like Sameer Gadkaree from The Institute for College Access & Success worry that allowing Pell Grants for unaccredited programs could waste funds and offer little return to students.

Rules

Where the Senate and House bills really split is on accountability for colleges. The House plan seeks to fine institutions that leave graduates burdened with student debt they can’t repay. The Senate version, meanwhile, proposes cutting off federal aid to programs that don’t show a positive income outcome for graduates.

That means if a college can’t prove its grads earn more than non-degree holders, it could lose financial aid eligibility. The idea has bipartisan appeal, but it might not survive due to Senate rules that limit what can be included in budget bills.

Challenges

Because Republicans aim to pass this legislation through the budget reconciliation process, they’re limited to changes that strictly affect spending. This makes policy-heavy reforms harder to push through.

Jon Fansmith from the American Council on Education expressed concern, warning against rushing complicated reforms without fully understanding the implications. “This process isn’t designed for complex policymaking,” he said.

While the final version of the bill may look different, one thing’s clear: Big changes are coming to student loans and financial aid. Students, colleges, and families across the country should pay close attention as Congress moves toward reshaping how America pays for higher education.

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