By Megan Sayles
AFRO Staff Writer
msayles@afro.com
The 47th president is pushing a major overhaul of the federal student loan and financial aid system as part of his proposed “big, beautiful bill,” which is now advancing in the Senate. A part of the package is the Student Success and Taxpayer Savings Plan, which would eliminate existing income-driven repayment options, restrict Pell Grants, cap loan amounts and end subsidized loans.
Proponents of the plan believe it will cut costs and reduce federal debt by tightening eligibility and streamlining repayment while holding colleges accountable for poor student outcomes and high default rates. But, education and borrower advocates warn it could burden students with higher bills and restrict access to college for those who need aid the most.
“There’s over 40 million Americans that owe a collective $1.7 trillion in student debt,” said Aissa Canchola Bañez, policy director at the Student Borrower Protection Center (SBPC). “We know that the burden of student debt impacts folks across their entire lives. It makes it harder for them to save for emergencies. It makes it harder for them to become homeowners. It makes it harder for them to open small businesses.”
Bañez’s organization works to advance policies that alleviate the burden of student loan debt on American households. She described the state of student loan and financial aid policy under the 47th president as mass uncertainty.
In the first few months of his second term, the president has tried to dismantle the Department of Education (ED), firing thousands of employees. His administration has also terminated workers at the Consumer Financial Protection Bureau, which protects student loan borrowers.
In February, income-driven repayment plan applications were removed from ED’s website. Though the applications were returned to the site after a lawsuit, Bañez said nearly 2 million of them have yet to be processed, leaving borrowers desperate for more affordable payments. In May, the 47th president also restarted forced collections of federal student loans in default.
“Accross the board, borrowers are having to choose between putting food on the table, paying rent or staying on top of their student loans,” said Bañez. “It’s egregious, especially when you consider the fact that these federal loan borrowers have a right to an affordable monthly payment, and it’s been made impossible by this current administration.”
Now, SBPC believes the Student Success and Taxpayer Savings Plan could exacerbate an already growing crisis.
Nearly two-thirds of Pell Grant recipients, low- and moderate-income students who receive support to help pay for college, could have their aid cut or eliminated, according to Bañez. The end of subsidized loans would increase overall costs for borrowers by thousands of dollars.
The plan would also eradicate graduate PLUS Loans, which allow graduate and professional students to borrow up to the full cost of attendance. These provisions could have profound consequences for Black and Brown students in particular.
“We’re either going to see them completely abandon the pursuit of higher education, or we’re going to see them pushed into the private student loan market where it is significantly more risky and expensive to take on loans and there is no safety net,” said
The Student Success and Taxpayer Savings Plan’s consolidation of existing income-driven repayment plans would sunset former President Joe Biden’s Saving on Valuable Education (SAVE) program. It would instead offer a standard plan and an alternative income-driven repayment plan, but Bañez said both would cost borrowers thousands of additional dollars every year.
The plan would also extend the timeline for student loan forgiveness from 20 or 25 years to 30 years for borrowers enrolled in the income-driven repayment plan.
“Not only are you asking people to pay more every month and every year, you’re also extending the amount of time they have to be in repayment. When you think about graduates who are going into workforces where there is already a racial or gender pay gap, these types of changes are going to disproportionately burden Black and Brown folks and women who just make less than their White counterparts in today’s economy.”
The Student Success and Taxpayer Savings Plan passed the U.S. House of Representatives as part of the 47th president’s big, beautiful bill on May 22. It is now in the Senate, with Republicans pushing to enact the package by July 4.
Republicans have argued that the existing student loan and financial aid system has not adequately addressed the crisis of high college tuition costs. They believe it could protect taxpayers by reducing defaults and holding colleges more accountable for student debt.
Rep. Tim Walberg (R-MI), chairman of the Education and Workforce Committee, issued a statement on May 22, encouraging the Senate to pass the legislation.
“It’s time we stopped asking taxpayers to foot the bill for our broken student loan system that has left borrowers in trillions of dollars of debt and has caused college costs to balloon,” said Walberg. “It’s time we stopped asking a factory worker in Michigan or a rancher in Texas to subsidize the student debt of a lawyer in Manhattan. I urge my colleagues in the Senate to end the status quo and get this bill to the president’s desk.”
