House Passes Trumps One Big Beautiful Bill, Heres What It Means For Student Loan Forgiveness And Repayment

Published: Thursday, May 22, 2025 at 4:32 pm

Trump's "Big Beautiful Bill" Could Radically Change Student Loan Forgiveness and Repayment

The House of Representatives recently passed President Trump's "One Big Beautiful Bill," a massive piece of legislation with significant implications for student loan borrowers. This bill, passed in the early hours of May 22nd, includes sweeping changes to federal student aid, potentially reshaping how millions repay their loans and access forgiveness.

The core of the bill centers on overhauling income-driven repayment (IDR) plans. Under the proposed changes, the current array of IDR options, including programs like PAYE and the Biden administration's SAVE plan, would be streamlined into just two choices for future borrowers starting July 1, 2026. The primary option would be the new Repayment Assistance Plan (RAP), which ties monthly payments to income, ranging from 1% to 10% of earnings. A key feature of RAP is the waiver of unpaid interest, preventing loan balances from ballooning. However, RAP extends the repayment term to a maximum of 360 qualifying payments (30 years), potentially leading many borrowers to pay off their debt in full before forgiveness.

Beyond repayment, the bill introduces new borrowing caps: undergraduates could borrow a maximum of $50,000, graduate students $100,000, and professional students $150,000. It also eliminates the Grad PLUS loan program and removes subsidized undergraduate loans for new borrowers after July 1, 2026. These measures aim to curb borrowing but could push students towards potentially more expensive private loans.

The bill also includes provisions that could indirectly impact the Public Service Loan Forgiveness (PSLF) program. A clause in the tax portion of the bill grants the Treasury Department the authority to revoke the tax-exempt status of nonprofits deemed to support terrorism. If a borrower's employer loses its tax-exempt status, employees would immediately lose eligibility for PSLF.

The bill now moves to the Senate, where its fate will be decided. Republicans are advancing the package via budget reconciliation, meaning it only needs a simple majority to pass. Given the bill's focus on tax cuts and spending priorities, significant changes to the student loan provisions are unlikely. The savings from the student loan reforms, estimated at over $300 billion, are financing other parts of Trump's agenda. If enacted, the changes would significantly alter the landscape of student loan repayment and forgiveness for both current and future borrowers.

Keywords: Student loan forgiveness, student loan repayment, Trump bill, One Big Beautiful Bill, income-driven repayment, IDR, Repayment Assistance Plan, RAP, loan caps, PSLF, Public Service Loan Forgiveness, student loans, federal student aid, loan forgiveness, student debt, SAVE plan, PAYE, ICR, student loan changes, student loan reform, House bill, Senate, budget reconciliation, student loan provisions, subsidized loans, Grad PLUS loans, nonprofit, tax-exempt status.

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