Student loans are a hot topic in Congress right now, with major changes being proposed that could reshape the way federal student aid works. If you're a student or loan borrower, the Student Success and Taxpayer Savings Plan could have a significant impact on your finances and future education plans. Most changes won’t take effect until July 2026.
What Is the Student Success and Taxpayer Savings Plan?
The current proposed legislation, called the Student Success and Taxpayer Savings Plan, is a budget reconciliation bill. This means Congress can pass it with a simple majority vote rather than needing approval from 60% of lawmakers.
The bill has already been approved by the House Education and Workforce Committee but still must go through the House Budget Committee and the Senate. For now, everything is still under discussion. But here’s what the bill is proposing and how it could change the federal student loan system.
Who Will Be Impacted?
Students attending college, and federal student loan borrowers. Everything from changes to calculating the cost of attendance, grants, federal student loans, and loan limits. However, we'll focus on the impacts offederal student loans in this article.
The bill will only impact the federal student loan program and doesn't directly impact private student loans. However, the proposed changes will have a broad impact on undergraduate and graduate students, parents of dependent students, and even those in repayment.
What Are the Proposed Changes?
The plan includes sweeping reforms for loan limits, PLUS loans, repayment plans, deferment rules, and more. Here’s a detailed look at the highlights:
Changes to Direct PLUS Loans
Direct PLUS Loans have been utilized by graduate or professional students, and parents of dependent undergraduate students. These loans are typically used to fill financial aid gaps.
- Graduate Students: Graduate students will no longer be eligible for PLUS loans.
- Parents of Undergraduate Students: Parent borrowing will also be capped under the new plan.
Limits on Federal Loan Borrowing
Borrowing limits will change significantly, with uniform caps for undergraduate and graduate students:
- Undergraduates can borrow up to $50,000 aggregate, regardless of if they are dependent or independent student.
- Graduate students will have limits of $100,000 for most programs if they have yet to be enrolled in a professional degree. The cap can be increased to $150,000 in some cases, for borrowers who have already previously enrolled in a professional degree.
- Graduate students will have limits of $100,000 for most programs if they have yet to be enrolled in a professional degree. The cap can be increased to $150,000 in some cases, for borrowers who have already previously enrolled in a professional degree.
- Overall Limit: All borrowers will face an overall aggregate borrowing cap of $200,000 across their entire education.
- Universities will also gain the ability to impose additional borrowing limits for students and parents—but only if those limits apply consistently across all students in the same program.
Subsidized Loans Eliminated
Subsidized loans—which don’t accrue interest while you’re in school, during your grace period, or during authorized deferment periods—will no longer be offered to undergraduate borrowers.
Repayment Plan Overhaul
Borrowers will have just two repayment plan options under the proposed bill:
- Standard Repayment Plan: 10–25 years based on loan balance.
- Repayment Assistance Plan, the new income-based plan:
- Borrowers will pay 1–10% of their income, based on earnings.
- Borrowers must make a minimum $10 monthly payment; current income-driven repayment plans can go as low as $0.
- Requires 360 on-time payments, equivalent to 3 years.
- Waived interest for payments which do not cover monthly accruing interest, as long as the borrower is making their minimum payments.
- Matching principal payments up to $50/month.
Deferment and Forbearance Policy Changes
Rules for deferment and forbearance would tighten significantly:
- Deferment for Economic Hardship and Unemployment will be eliminated starting July 2025.
- Forbearance will be limited to nine months per 24-month period. Currently, it’s allowed in 12-month intervals, up to a three-year maximum.
- Medical and dental interns/residents can use forbearances with no interest accrual only for the first four 12-month intervals.
Public Service Loan Forgiveness (PSLF)
There would be changes to the way some medical internship and residency periods will be considered, in addition to the repayment plans eligible for PSLF..
- Medical or dental internships and residencies will no longer be considered work for public service under PSLF. However, this will only apply to borrowers who did not borrower loans for a program of student as of June 30, 2025.
- To count eligible payments toward PSLF, borrowers must enroll in the new income-driven plan.
Loan Rehabilitation for Defaulted Borrowers
Defaulted borrowers will have an opportunity to rehabilitate their loans twice (compared to the current one-time limit), with a requirement of at least a $10 payment.
Key Concerns About the Legislation Impacting Student Loans
While the bill aims to address student debt challenges, it’s not without potential downside risks. Limiting federal loan access doesn’t solve the root issue—skyrocketing college costs. Without addressing affordability, reducing loan availability could leave students with significant financial aid gaps, especially those from low-income or underprivileged backgrounds.
With tighter federal loan limits, students may need to turn to private student loans, which often come with stricter qualification requirements, higher interest rates, and fewer consumer protections. This could disproportionately impact underprivileged groups who rely on federal aid to access higher education.
Chances of this Bill Passing?
The bill is expected to pass in the House but may face hurdles in securing a majority in the Senate. Only time will reveal its fate. However, as a budget reconciliation bill, it stands a better chance of approval compared to other types of legislation.
With over 40 million student loan borrowers in the U.S., any changes resulting from this bill could significantly impact repayment strategies. Staying informed is essential.
Be sure to visit our blog tomorrow, where we’ll unpack how this legislation could affect colleges, federal student aid programs, and what it means for you.