On April 29, Republican members of the House Education and Workforce Committee unveiled a sweeping proposal to reform the federal student loan program. Led by Rep. Tim Walberg of Michigan, the plan seeks to cap federal student borrowing and reduce repayment options, citing a need for greater fiscal responsibility and institutional accountability. Under the proposed changes, undergraduate students would face a federal loan limit of $50,000, while graduate students would be capped at $100,000, effective July 1, 2025.
Walberg framed the measure as a response to decades of what he called ineffective government spending on higher education. “Colleges have ridden this gravy train of taxpayer dollars without any accountability for the quality of the education they provide or whether students can find jobs when they graduate,” he stated. The proposal also aims to make colleges partially responsible for the debt outcomes of their students, a move the GOP hopes will encourage institutions to better align education with employment outcomes.
Consumer Advocates Warn of Reduced Access and Protections
The proposed reforms have drawn sharp criticism from consumer advocacy groups, who argue the changes could make college less accessible and repayment more difficult. Sameer Gadkaree, CEO of The Institute for College Access & Success, warned that the bill could “severely restrict college access by slashing financial aid programs, eliminating basic consumer protections and making it harder to repay student loan debt.” Critics argue that reducing access to federal student loan program may drive more students toward private lenders, who often offer fewer safeguards for borrowers.
Higher education analyst Mark Kantrowitz echoed this concern, suggesting that the new borrowing limits could increase reliance on private loans. “Private student loan programme offer far fewer borrower protections than federal student loans,” he said. In addition to loan caps, the GOP plan proposes to streamline repayment into a single income-driven repayment (IDR) plan for new borrowers, while eliminating key deferment options for those facing unemployment or financial hardship after July 2024.
Borrowers Already Struggling with Repayment Options
The proposal comes at a time when student loan borrowers are already under strain. According to data released by the Consumer Financial Protection Bureau (CFPB) late last year, a significant portion of borrowers—42%—have only ever used the standard repayment plan and remain unaware of alternative repayment options. Former CFPB Director Rohit Chopra noted that many borrowers relied on temporary relief measures to improve their financial situations. “It’s clear that many borrowers are struggling with repayment, and there is more work to be done to ensure repayment options are accessible and effective,” Chopra said.
Compounding these challenges, more than 9 million borrowers were already behind on their payments as of early 2024. A February report warned that falling behind could significantly damage borrowers’ credit scores, with drops of up to 129 points possible.
As the GOP’s proposal moves forward, debate continues over whether it will bring necessary accountability or create new barriers for students seeking higher education and financial stability.
