Topline

President Donald Trump’s sweeping domestic policy bill proposes a major overhaul of student loan programs and repayment plans in order to fund the bill’s tax cuts—though as the bill has made its way to the Senate after passing the House, some of its most controversial proposals are getting stripped down.

House Version: The House version of the bill proposes changing the formula for how much the federal government grants borrowers. Loans would be calculated based on the median cost of all similar college programs, rather than the cost to attend the specific school or program the student is attending. (It is unclear how that number will be calculated.) That means students attending higher-priced schools would receive less money, because the rate will take into account other schools that are less expensive.

How It’s Changing: The Senate HELP Committee’s version of the bill gets rid of that provision entirely, meaning student loans would be calculated as they have been in the past, though it remains to be seen what the final bill text will say.

House Version: The House bill changes existing caps on student loans and imposes new limits on the amount of federal student loans that both parents and students can take out, with a ceiling of $50,000 in total undergraduate loans and $100,000 or $150,000 for graduate and professional programs. Parents would also be limited to only taking out $50,000 total in federal loans to pay for their children’s education, which applies even if parents are taking out loans for multiple children. Students and their parents would not be allowed to borrow more than $200,000 in total—including both undergraduate and graduate loans—under the House bill.

How It’s Changing: The Senate version of the bill gets rid of the $50,000 cap for undergraduate students, though it does limit parents to borrowing $20,000 per year for each child, with a $65,000 total cap per student. It also limits graduate students to $20,500 per year in loans and $100,000 in total, while students in professional schools, like medical school, are limited to $50,000 in loans per year and $200,000 in total. The Senate slightly raised the overall lifetime cap on student loans from the House version, now capping all federal student loans that a borrower receives—excluding Parent PLUS loans—at $257,500. Those limits would all take effect on July 1, 2026, under the Senate bill, but students who are already borrowing money would be allowed to use the old rules until they finish their program of study.

House Version: House lawmakers proposed limiting some federal loans, including restricting graduate students and parents from receiving Federal Direct PLUS Loans starting in July 2026. It also prohibits parents from taking out loans if the student hasn’t taken out the maximum amount of unsubsidized loans they’re eligible for first, and gets rid of subsidized loans for undergraduate students. The bill restricts many non-citizens from being eligible for student aid, which they could previously receive, including asylum seekers, refugees and human trafficking victims.

How It’s Changing: The Senate version also gets rid of the Graduate PLUS loan program, but does away with the restrictions on when parents can take out loans, and keeps subsidized loans for undergrads. The HELP Committee kept the restrictions on non-citizens receiving student aid, but the Senate Parliamentarian has said the Senate cannot impose those restrictions.

House Version: The bill would abolish most of the current options that borrowers have to repay their student loans, instead giving borrowers—including those who have already been paying off loans—the choice of only a standard repayment plan or a new Repayment Assistance Plan (RAP) based on annual income. The standard repayment plan means borrowers will pay back their loan at a fixed rate each month. Loans of up to $25,000 will be paid over the course of 10 years, loans of up to $50,000 will be paid over 15 years, loans of up to $100,000 will be paid over 20 years and loans over that amount will be spread out over 25 years. RAP replaces existing income-driven repayment plans, but still allows borrowers to make their monthly payments based on income. Borrowers pay rates based on their annual income, which range from $120 per year for those making less than $10,000 (divided up into $10 monthly payments) to 10% of gross annual income for those making over $100,000. Unlike previous income-based plans, RAP allows borrowers’ remaining loans to be forgiven after 30 years of making payments—up from 20 or 25 years under current plans—and has a minimum payment of $10 each month, while low-income borrowers can now qualify for $0 repayments.

How It’s Changing: The Senate’s version of the repayment plans are mostly the same, but it allows borrowers to take their spouse’s income into account, while the House version wouldn’t. The Senate version also keeps a cap on monthly payments under income-based repayment plans, which the House got rid of.

House Version: The bill says the new provisions on loan repayments will apply to all borrowers who are still repaying their debt. RAP would take effect on July 1, 2026, though it also directs the Secretary of Education to start transitioning to the new payment policies within nine months of the bill being enacted into law.

How It’s Changing: The Senate kept the provisions requiring current borrowers to switch to the new repayment plans, but the Senate Parliamentarian struck that down, ruling senators cannot pass it with only a simple majority. That means the final version of the bill is likely to let existing borrowers keep their current income-based repayment plans, and only new borrowers would have to choose between RAP or the standard payment plan.

House Version: The House version of the bill states students can’t receive Pell Grants if they’re enrolled in school less than half time and raises the necessary number of credits taken per year from 24 to 30, a controversial proposal that the SBPC noted would affect many low-income students who are attending school in their spare time. The bill also disqualifies students from Pell Grants if their student aid index—a number demonstrating a student’s financial need, based on their families’ financial resources and expenses—is at least twice the maximum Pell Grant given that year. House lawmakers established a new Pell Grant program for short workforce training programs, which must be less than 15 weeks long and either lead to a postsecondary certification or is recognized by a state’s governor as aligning with a “high-skill, high-wage” or “in-demand” job or industry.

How It’s Changing: The Senate got rid of the House’s changes to how many credits a student must be enrolled in in order to receive Pell Grants, though it kept the restrictions based on a borrower’s student aid index in tact. The Senate Parliamentarian also struck the creation of Pell Grants for short-term courses from the bill.

Both versions of Trump’s policy bill get rid of current rules that allow borrowers to temporarily have their loan payments deferred due to unemployment or economic hardship, which will apply to borrowers who take out loans starting in July 2025. Both the House and Senate also place new limits on forbearance—a temporary pause on loan payments—which states loans can’t be in forbearance for more than 9 months during any 24-month period. The bill does help borrowers by allowing them to now rehabilitate their loans twice, rather than once. That refers to when borrowers can get out of being in default on their loans by making a certain number of on-time payments under a rehabilitation agreement.

The new restrictions on federal student loans could force more students and parents to turn to private lenders, which currently make up less than 10% of all student loans issued. Private loans have many disadvantages as compared with federal ones, as they typically have higher interest rates, are not eligible for income-based repayment plans and don’t offer forgiveness programs. Medical experts have also warned the House’s proposed $150,000 cap on loans for professional schools could further exacerbate the U.S.’s doctor shortage by making it more expensive for students to attend medical school, though the Senate version of the bill slightly raises that cap. When it comes to paying off loans, SBPC projects RAP will broadly increase borrowers’ payments as compared with previous Biden-era income-based payment plans designed to help borrowers make lower payments. The average borrower with a college degree will pay $2,928 more per year than under the Biden-era SAVE plan, SBPC estimates, and the bill also means borrowers will spend longer paying off their loans than they would under current rules.

42.5 million. That’s the number of borrowers with outstanding federal student loan debt as of the second quarter of 2025, according to the Department of Education.

Student loan debt has become a key political issue over the past few years, as Democrats have fought for loan forgiveness and the Biden administration sought to provide sweeping debt relief, only to have Republicans challenge it in court and the Supreme Court strike it down. While the Biden administration still made numerous piecemeal moves to forgive Americans’ debt, the Trump administration has not followed suit, with Education Secretary Linda McMahon saying in April that “American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies.” Trump has ordered the student loan portfolio to move under the Small Business Administration as he seeks to abolish the Department of Education, and he has also sought to restrict loan forgiveness for public servants so that it excludes employees working at organizations that are opposed to his policy agenda. Most notably, the Trump administration resumed debt collections May 5 for borrowers who have defaulted on their student loans, after collections had previously been on pause since the COVID-19 pandemic. The move is expected to impact millions of borrowers who haven’t paid their loans for approximately nine months, and the Trump administration intends to garnish a portion of workers’ wages if their loans remain unpaid.