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- Biden-era borrower defense and closed school discharge rules are repealed, cutting off relief for defrauded borrowers.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- Anyone using the SAVE Plan, which could be repealed even sooner via regulation or executive action.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.
Hello Pedro. I hope to gain some insight. I was switched from PAYE to SAVE last Summer. At that time, I was 60 payment counts in towards my PSLF. As well as under SAVE (which I know is being demolished), I was 235 into the 240 required payment counts for IDR Forgiveness as I have all undergrad loans that originated in 2004. Being that I am SO CLOSE to getting the IDR Forgiveness, what is your recommendation as far as trying to switch from SAVE to another plan to get these last 5 counts in before things take a potential nose dive! Thanks so much in advance!
Hi Cindy,
Thank you for reaching out, you’re absolutely right to double-check your options now, especially given how close you are to potential IDR forgiveness.
Here’s what you need to know based on your situation:
Since your loans originated in 2004 and you’re currently at 235 payments toward IDR forgiveness, the most important step is to verify your official payment count with your loan servicer and on [StudentAid.gov](https://studentaid.gov/). Thanks to the One-Time Payment Count Adjustment, borrowers who have been in repayment for at least 20 years (240 months) — like you — may already qualify for automatic forgiveness, even if you’re currently in the SAVE plan’s paused forbearance.
Do this immediately: Call your servicer and ask about the application of the one-time adjustment to your loans. There might be a discrepancy in your payment count or a delay in processing. If the adjustment has been correctly applied and you’re at 240 or more, you may already qualify for IDR forgiveness.
As for switching plans: do not switch to IBR right now unless you receive confirmation that the adjustment has not brought you to 240 months. While IBR is still active due to being created by Congress, it requires 25 years (300 payments) for forgiveness — which would mean making 65 more payments, not 5.
Right now, the SAVE plan’s general forbearance is not accruing interest but also not helping you progress toward forgiveness — so time is of the essence in confirming your count.
Let me know what your servicer says or if you need help interpreting their response. You’re incredibly close, and this step could make all the difference.
Higher education can be a life-changing investment but it’s also expensive. When personal savings, scholarships, and grants aren’t enough, many students turn to student loans to finance their education.
Absolutely it’s such a powerful investment, but the price tag can be daunting. You’re spot on.
Now that the bill has squeaked by in the House it should be interesting to see what changes will come in the Senate.. Hopefully, not worse….
Elon just threw a wrench into the mix. Which is actually a good thing as he has made the spending high profile and into the mainstream debate. With Elon going all out to tank the bill, it might make Senators think twice for supporting it.
I am hoping for this as well. To be honest, old IBR is still the most affordable for me (minus SAVE) having completed med school prior to new IBR but I am very much in the game being in PSLF and working in a rural hospital the last 4 years. The disastrous effects this bill could have on physicians completing their residencies and not receiving PSLF credit, caps on loans, and Medicaid cuts will have major effects on healthcare and those entering the medical professions.
Well, the Senate succeeded in making things worse by eliminating the married filing separately provision from the RAP plan. That just leaves old IBR assuming it’s not touched too. They raised loan limits some but that won’t matter when people have no ability to pay them back.
“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”
So was REPAYE
Great points. I agree.
Thanks Pedro. Good to know and quite sneaky of them to put that in there. They really want to make any other plan but their own be the go to plan for borrowers. Assuming one’s income continues to rise and dependent of course on loans owed, they will push more people out of IBR sooner with lack of a cap as the standard plan will become at some point the cheaper option.
Hi Sam, thanks for sharing your experience. It’s helpful to hear how borrowers like you are navigating all the changes.
On MOHELA not processing IBR applications: you’re not alone. Servicers were told to stop processing IDR applications earlier this year due to a court ruling. But as of March 26, 2025, applications for IBR, PAYE, and ICR were reopened. MOHELA and others may still be catching up, but technically, they should be processing these again. You can check the official update here: https://studentaid.gov/announcements-events/idr-court-actions
Was your experience with MOHELA recent?
As for switching from SAVE to IBR for PSLF—that move makes sense. Since the SAVE forbearance doesn’t count toward PSLF, switching to IBR gets your payments counting again. IBR is still eligible for PSLF, and past payments under SAVE can count toward IBR forgiveness once you switch.
On the proposed legislation—you’re mostly right. It would kill off ICR and replace all IDR plans for new loans with RAP. But IBR wouldn’t be untouched—it would stick around for current borrowers, but with some changes like higher payments and no payment cap.
That said, we still haven’t seen what the Senate version of the bill will look like. The House often puts forward more ideologically driven proposals, while the Senate—especially with competitive seats up for election—may take a more moderate or pragmatic approach. Political pressure from voters is likely to shape how far any final bill goes.
Appreciate your comment. Keep us posted if you hear more from MOHELA.
Question. I was on IBR and then when SAVE came out, I applied and moved over. A couple months ago I received a letter from MOHELA that said my next recert is July 2026. How would that work if Congress is able to make their draconian changes? I am 68 and fine with staying in SAVE until they force me off. Figure I’d go back to IBR. MOHELA said my social security doesn’t count for income purposes and I have an IRA disbursement and very small pension. On SAVE my payment was $26.43, all interest. So who knows on RAP. Would they force me to recert before 7/18/26? I am unmarried, no kids and have let executors know my loans die with me, just notify MOHELA and Fed Loan. I also deleted auto deduct until I know what is happening. Many people say MOHELA started deducting again without notice. I also revoked the ability to access my IRS records, again til I know. So, does my reasoning seem sound? I know it could all be moot depending on what trump and maga congress do.
Hi Cindy, thanks for sharing your situation, you’re clearly thinking this through carefully, and that’s really important right now.
Your July 2026 recertification date is most likely your original one, not an extension. The Department of Education only extended dates for borrowers originally scheduled to recertify between March 18, 2025, and before February 1, 2026. Since your date falls outside that window, there’s no sign you’ll have to recertify earlier than expected.
As for the proposed GOP bill—the “Student Success and Taxpayer Savings Plan”—it’s complicated but important.
While some summaries suggest existing repayment plans would remain for current borrowers, the actual legislative language repeals the authority that allows SAVE, PAYE, and ICR to exist. If that bill becomes law, it would likely mean that even current SAVE borrowers like you would be moved to a new Repayment Assistance Plan (RAP) or, in some cases, to IBR—which would still be available for loans disbursed before July 1, 2026.
On the income side: MOHELA telling you that your Social Security “doesn’t count” probably means it isn’t taxable in your case, and therefore doesn’t show up in your AGI.
But your pension and IRA distributions usually do count and factor into IDR payment calculations. That $26.43 SAVE payment (which went entirely to interest) suggests your discretionary income was quite low—and SAVE’s interest waiver benefit helped keep your balance from growing.
Pausing auto-debit and revoking IRS access is completely reasonable while things are in flux. With the current 0% interest forbearance, you’re not required to pay, and managing things manually gives you more control—especially with reports of surprise deductions.
And yes, your understanding about loan discharge upon death is absolutely correct. Telling your executors to notify MOHELA and the Department of Ed is the right move.
You’re making thoughtful decisions in a very uncertain environment. Keep staying informed—and don’t hesitate to reach out with more questions as things develop.
Unfortunately, loan service companies such as MOHELA aren’t even processing IBR applications. For myself, I am in SAVE and I plan on going back to old IBR once the SAVE forbearance ends to continue my payments towards forgiveness as I am in PSLF. From what I understand, old IBR will not be effected but all other income repayment plans will be eliminated and replaced with the new RAP.
Thank you for getting back. My experience was actually at the end of April and early May. They did say they would “accept” an application but not process it. Not to push you for too many details but when you speak of no payment cap on old IBR anymore with the proposed legislation, is that to say if based on your income and their normal calculation of AGI etc your potential repayment could be higher than what it would be under the 10 year standard? I assume the calculation is not changing just that if you make more money it can keep going higher and higher. Thank you.
Yes, under the proposed legislation, the standard repayment cap would be eliminated for borrowers in the modified IBR plan tied to loans disbursed before July 1, 2026.
In the current version of IBR, there’s a safety net: your monthly payment is capped so it can’t exceed what you’d pay under the 10-year Standard Repayment Plan, even if your income increases. That cap is meant to protect borrowers from unreasonably high payments as their income grows.
The proposed legislation removes that cap. So instead of having your payment stop at the 10-year standard amount, you’d be required to pay 15% of your discretionary income, no matter how high that number goes. That means if your income rises, so does your payment—with no upper limit tied to the 10-year benchmark.
The formula for calculating discretionary income (AGI minus a set percentage of the poverty guideline) isn’t explicitly changed in this proposal, but the removal of the cap means the monthly payment could now exceed what you’d pay under a standard 10-year plan—something that wasn’t possible under the old IBR.