A sign calling for student loan debt relief is seen in front of the Supreme Court
The committee’s draft bill would repeal the SAVE income-driven repayment plan, which eased the path to loan forgiveness. REUTERS

House Republicans on the Education and Workforce Committee have introduced sweeping legislation to revamp the federal student loan and financial aid system, representing a major shift in how students finance higher education.

The GOP proposal, dubbed the Student Success and Taxpayer Savings Plan, called for new borrowing caps and a streamlined repayment system, in addition to supporting broader Republican efforts to fund tax cuts first implemented under President Donald Trump.

The plan, spearheaded by Committee Chair Tim Walberg, passed along party lines in a 21-14 vote. If enacted, it would overhaul programs under the Higher Education Act of 1965 and generate an estimated $351 billion in federal savings, according to a preliminary assessment by the Congressional Budget Office, Politico reported.

The figure exceeds the $330 billion in savings targeted by House Republicans to help pay for a larger legislative package that includes tax reductions, investments in border security, and changes to energy policy.

In a sharp rejection of President Joe Biden's student loan policies, the committee's draft bill would repeal the SAVE income-driven repayment plan, which eased the path to loan forgiveness.

"The Biden-Harris administration's foolish actions in the federal student loan program exacerbated this budgetary catastrophe," Walberg stated. "From their radical SAVE loan repayment plan to the never-ending repayment pause, Democrats are intent on forcing taxpayers to pay for free college."

Meanwhile, Democrats had offered more than three dozen amendments during a committee markup on Tuesday -- all of which were rejected.

Consumer and student advocacy groups have condemned the proposal, arguing it would worsen the already high cost of college and put further pressure on families trying to afford higher education.

Here's a look at key measures included in the Republican legislation.

Borrowing limits for student loans

The legislation would impose new federal student loan limits beginning July 1, 2026. Undergraduate borrowers would be restricted to a lifetime maximum of $50,000 in federal loans, while graduate students would face a $100,000 cap, CNBC reported.

Currently, loan limits vary based on student status and academic year. For many borrowers, the proposed changes would result in their borrowing capacity being reduced.

Consolidation to a single IDR plan

Under the GOP plan, future federal student loan borrowers would have access to just one income-driven repayment (IDR) plan. These plans are designed to align monthly payments with a borrower's income, easing financial burdens after graduation. As of September 2024, over 12 million borrowers were enrolled in IDR plans.

The proposal also eliminates key safety nets: both unemployment deferments and economic hardship deferments would be discontinued for loans taken out on or after July 1, 2025.

Stricter Pell Grant eligibility rules

The plan would raise the academic workload needed to qualify for the full federal Pell Grant. Students would need to complete at least 30 credit hours per year, up from the current standard of 12 hours per semester.

The Pell Grant program, one of the largest sources of need-based federal aid, was established in 1965. In 2020, it supported over 6 million undergraduates. The maximum grant award for the 2025–26 academic year is set at $7,395.

In a notable shift, the proposal also broadens Pell Grant eligibility to include students enrolled in short-term workforce training programs.

Originally published on IBTimes