As 2025 approaches, many student loan borrowers could face higher monthly payments, thanks to potential changes in federal laws. The College Cost Reduction Act, introduced by Rep. Virginia Foxx, seeks to reshape the student loan landscape while reducing the national deficit by up to $280 billion over the next decade. However, this shift could significantly impact what students owe, sparking debate about who benefits and who gets left behind.
A major element of the proposed law involves scrapping President Biden‘s SAVE income-driven repayment plan. According to Jessica Thompson, Senior Vice President at The Institute for College Access & Success (TICAS), “The reality is, the College Cost Reduction Act would increase financial burdens and risks for students and borrowers.” She adds that the plan would likely lead to higher monthly payments and increased risks of delinquency and default.
One notable change would be requiring borrowers to repay loans on a standard 10-year plan, which could mean higher payments for many. Additionally, borrowing caps would limit undergraduates to $50,000 in loans and graduate students to $100,000.
Michael Ryan, founder of michaelryanmoney.com, warns that this could hurt those in costly professional programs like law or medicine. “High-income graduate borrowers might benefit from the capped payments,” Ryan explains, but for others, access to federal loans may become a barrier.
