Some student loan borrowers could see their payment plans increase by an average of $200 under new Republican budget plans.
Republicans in the House of Representatives are set to vote on a massive budget resolution this week that includes $4.5 trillion in tax cuts and $2 trillion in cuts to several federal programs, including Medicaid and student loans.
Some advocates say the resolution could have an outsized impact on some of the 42 million Americans with student loan debt, driving their payments up.
While the specifics of the resolution could change, the Institute for College Access and Success estimates that monthly student loan payments could increase by $200 for the average borrower.
“For low-income borrowers, the House Republican proposal requires monthly payments at a lower income threshold, thereby protecting less income for basic needs,” the institute said in a statement last month. “A borrower with a $30,000 annual income (less than $700 monthly discretionary income) will need to pay $54 per month or fall into delinquency.”
Republicans are specifically looking to end former President Joe Biden’s Saving on Valuable Education income-driven repayment plan, which lowered some borrowers’ monthly payments to $0, The Hill reports.
The plan is also at the center of a lawsuit filed by seven red states that allege Biden overstepped when introducing the plan. The 8th U.S. Circuit Court of Appeals ruled in their favor last week, blocking the plan.
The plan could also mark the end of other income-driven repayment plans for borrowers, as Republicans want to streamline the plans into just two options for loans that began after June 30, 2024, according to The Hill. Lawmakers estimate this would save $127.3 billion in 10 years.
Republicans will seek to pass the resolution through something called the reconciliation process. Reconciliation allows the party to pass much of President Donald Trump’s agenda without Democratic support.
That’s because reconciliation bills — unlike most bills — don’t need support from 60 Senators to move forward as long as the legislation relates to the budget. Instead, reconciliation requires a simple 51-vote majority — and Republicans have 53 seats in the Senate.
Speaker of the House Mike Johnson claims the massive resolution — and the subsequent reconciliation process — will help lower the cost of living.
“We'll use the reconciliation process to check a lot of the boxes of the promises that we made,” Johnson said Monday. “And that is how we will get to the cost of living.”
“There's a lot of mixed messages out there, but obviously inflation continues to be a major problem,” he added.
“The way to do that is to make sure small businesses have certainty to make sure we don't have the largest tax increase in US history, which is what will happen by default at the end of this year if we're not successful in this mission to get taxes down, reduce regulations, and free up the free market again.”
Elsewhere, House Republicans are also considering pulling back some regulator authority from the Department of Education so they could no longer propose sweeping student loan cancellations without congressional approval, according to The Hill.
