In late April 2025, House Republicans unveiled a sweeping student loan reform proposal that could rewrite the rules for repayment and forgiveness starting in 2026.
The GOP student loan proposal aims to replace the current income-driven repayment landscape with a single new option, end cornerstone forgiveness programs, and limit how much students can borrow in federal loans.
But don’t panic—none of this is law yet.
In this post, we break down what’s in the GOP bill, what’s likely to happen next, and what you can do right now to protect yourself.
What’s in the GOP Student Loan Bill?
The Republicans’ student loans agenda, part of a broader budget reconciliation bill, includes major structural changes to the student loan system. Here are the highlights of the GOP bill:
- Ends SAVE, PAYE, and ICR plans, while preserving IBR in a modified form for current borrowers.
- Introduces a single “Repayment Assistance Plan” (RAP) for loans disbursed after July 1, 2026, with payments ranging from 1–10% of AGI depending on income, small matching payments, interest waivers for on-time payers, and forgiveness after 30 years.
- Public Service Loan Forgiveness (PSLF) would no longer cover medical residents or new borrowers relying on SAVE or PSLF for relief.
- Federal loan limits would be capped at $50,000 for undergrad, $100,000 for grad, and $150,000 for professional programs, with Grad PLUS and subsidized loan programs eliminated after July 1, 2026.
- Biden-era borrower defense and closed school discharge rules are repealed, cutting off relief for defrauded borrowers.
Who Loses the Most Under the Republicans’ Student Loan Plan?
- Graduate and professional students, especially doctors, lawyers, and MBAs who rely on Grad PLUS or large IDR forgiveness.
- Borrowers banking on PSLF, especially those who haven’t yet certified qualifying employment. These changes could also impact eligibility across multiple federal student loan forgiveness programs, making it more important than ever to understand the current landscape.
- Anyone using the SAVE Plan, which could be repealed even sooner via regulation or executive action.
Sherpa Tip: This GOP bill isn’t just about repealing SAVE — it’s part of a broader strategy using reconciliation to fast-track sweeping changes. While the final outcome is still uncertain, one thing is clear: borrowers who act early are better positioned.
Certifying employment or enrolling in a plan now could improve your odds of being grandfathered in if a plan survives. This isn’t the time to be passive — even if your plan makes it through, you could be locked out by missing key deadlines. A smart move now could make all the difference later.
Considerations While SAVE and PSLF Are Still Active
If you’re currently on an IDR plan or pursuing PSLF, this may be the right time to explore your options.
Here are some considerations you can discuss with a Certified Financial Planner or student loan advisor:
- Whether certifying income under SAVE is still a viable short-term strategy
- How potential changes might impact new federal borrowing after July 2026
- Whether consolidating older loans could help lock in access to forgiveness pathways
- How your AGI affects student loan payments and how retirement contributions factor into it under existing IDR plans
- The benefits of staying current with annual PSLF employment certification
These aren’t recommendations — they’re conversation starters for borrowers trying to make informed decisions in a moving policy landscape.
What Happens Next for Student Loan Repayment Plans? (2026 Is the Real Fight)
Political Scenarios That Matter:
- If Republicans keep control of Congress in 2026, there’s a real chance the bill—or something like it—becomes law.
- If Democrats flip a chamber or there’s a split Congress, expect gridlock, with GOP student loan cuts likely blocked.
- Under Trump’s second administration, there is also potential for regulatory changes that weaken or phase out existing IDR programs through executive action or Department of Education rulemaking.
Will the Entire GOP Student Loan Plan Pass?
From a procedural standpoint, the House GOP student loan bill is designed to move through budget reconciliation. Every major provision — repealing the SAVE Plan, ending Public Service Loan Forgiveness (PSLF), and capping graduate-level borrowing — clearly affects federal spending.
But just because it’s designed for reconciliation doesn’t mean the full package makes it through intact.
The real challenge is political. Some of these provisions are bound to face pushback — not just from Democrats, but from moderate Republicans who may hesitate to endorse the optics of rolling back forgiveness programs.
Legal Landmines That Complicate Full Repeal
Even if the Senate GOP is aligned with the House ideologically, the legal landscape creates friction:
Why PAYE May Be Grandfathered but Vulnerable
- PAYE was established via regulation under Obama (2012) using discretionary authority under HEA, not direct statutory mandate.
- Courts have often held that borrowers can enforce repayment terms as defined in their Master Promissory Notes (MPNs), which may reference PAYE repayment expectations.
- There is precedent for grandfathering repayment plans for borrowers who do not leave them (as seen in the 2023 SAVE rollout transition for PAYE borrowers).
- PAYE requires a “partial financial hardship” to qualify and has strict new borrower criteria (must have no federal debt before Oct 1, 2007 and a new loan after Oct 1, 2011).
Why SAVE Is the Most Likely Plan to Be Eliminated
Among all current repayment plans, SAVE appears to be the most vulnerable to repeal, and likely the first target if the GOP’s proposal advances. Unlike IBR (which was created by statute) or even PAYE (which has been embedded into borrower expectations through prior MPN language), SAVE is a very recent, regulation-only creation from the Biden administration.
- SAVE was implemented through executive rulemaking in 2023, and it does not have statutory protection. That means a future administration or Congress could eliminate it without passing new legislation, simply by reversing or replacing the regulation.
- Because SAVE is still relatively new, borrower reliance is less entrenched, making it a politically easier target.
- The GOP proposal explicitly calls for the elimination of SAVE, and we’ve already seen early efforts to unwind the plan via litigation and regulatory challenges.
Master Promissory Note (MPN) Legal Protections
- Borrowers who signed MPNs with repayment expectations based on PAYE or IBR may have a contractual basis to challenge abrupt plan cancellations — especially if those plans were in place when the borrower began repayment and were directly referenced in servicing communications.
- These protections are generally stronger for plans with clear statutory or regulatory definitions at the time the borrower enrolled — which applies more directly to PAYE and IBR than SAVE.
- Both PAYE and SAVE were created through regulation, not statute. But PAYE has been in place for over a decade, and its longer history and deeper presence in borrower communications give it a more established legal footprint than SAVE.
- Courts have previously been deferential to borrower rights under MPNs in challenges to retroactive changes to forgiveness or servicing terms — but MPNs also contain language stating that terms are subject to change, which creates legal ambiguity and has been used by the Department in past defenses.
Sherpa Note: Although both PAYE and SAVE were created through regulation, PAYE has been part of the federal repayment framework for over a decade. That longer track record gives it more weight in court challenges and borrower expectations, particularly when MPN terms are considered. That’s why we believe there’s a good chance some version of PAYE may survive — or that existing borrowers might be grandfathered in.
Sherpa Note (Policy + Byrd Rule)
In our view, there’s little reason to believe that the student loan provisions of the GOP reconciliation bill would fail Byrd Rule scrutiny. Each of the key reforms — repealing SAVE, capping loan limits, modifying IBR — clearly affects federal spending and revenue.
That said, other parts of the bill, particularly related to immigration or culture-war policies, could be more vulnerable to procedural challenges in the Senate. That could create headwinds for the entire package unless a more moderate version emerges.
The biggest risk to the student loan provisions isn’t the rules — it’s the politics. Senate Republicans may face serious pressure to soften or delay parts of the proposal to avoid the appearance of ripping away forgiveness programs during a fragile recovery.
Stay Calm. Stay Informed. Stay Strategic.
We’re watching every development closely and will update you the moment something changes.
This isn’t just politics. It’s your debt, your future, your financial freedom.
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Worried About How This Affects Your Loans and Long-Term Finances?
Chatting with a Certified Financial Planner can help you evaluate how these proposed changes may impact your student debt repayment strategy and your broader financial goals — from retirement planning to tax efficiency.
We’ll walk through the scenarios, assess your current repayment plan, and help you make smart, forward-looking decisions tailored to your individual situation.