House Education and Workforce Committee Republicans have introduced a new plan aimed at reforming the nation’s student loan and financial aid system. The proposal would go beyond these posited changes and make sweeping alterations. It has caps on student debt and less repayment flexibility for borrowers. At the same time, this major federal tech initiative represents a key change in how federal student loans will be disbursed and administered moving forward.
Beginning July 1, 2026, these changes would establish a borrowing limit on federal student loans. For students pursuing undergraduate programs, the amount would be capped at $50,000. Graduate students will be subject to an even higher cap of $100,000. As a first step to forgiveness, the plan focuses on ending unemployment and economic hardship deferments. This policy change will only impact federal student loan borrowers who incur new debt after July 2025. Together, these changes are poised to remake the entire world of student financing.
In a statement, Committee Chairman Tim Walberg, a Republican from Michigan, explained the thinking behind the proposal. He stated, “For decades Congress has responded to the student loan crisis by throwing more and more taxpayer dollars at the problem — never addressing the root causes of skyrocketing college costs.” This new committee’s focus on systemic problems, such as inequities within the current higher education financing structure, is particularly evident in this statement.
Income-Driven Repayment (IDR) plans overall allow borrowers to limit their monthly payments to some percentage of their discretionary income, depending on the particular IDR plan. As of September 2024, over 12 million people were signed up for these plans. The new proposal aims to streamline repayment options, which some critics argue could hinder access to education for many students.
Mark Kantrowitz, a financial aid expert, warned about the message the proposed borrowing limits could send. He noted that these restrictions “will shift some borrowing to private student loans,” which typically offer fewer protections compared to federal loans. This move increasingly does so at both the federal and state levels with respect to financial burden placed on students, especially those from low-income backgrounds.
The Pell Grant program we know today was created in 1965. It remains inarguably one of the biggest drivers of financial aid to college students today. Supporting Pell Grants In FY 2020, over 6 million undergraduate Pell Grant recipients helped make higher education more affordable. We call for the maximum Pell Grant award to be increased to $7,395 for the 2025-26 academic year. Critics of the new proposal argue that slashing financial aid options could severely restrict college access for many prospective students.
Sameer Gadkaree, an education advocate with the Leadership Conference on Civil and Human Rights warned that the plan would harm students. He stated, “The committee’s current proposal would severely restrict college access by slashing financial aid programs, eliminating basic consumer protections and making it harder to repay student loan debt.”