Republican lawmakers have proposed the Student Success and Taxpayer Savings Plan, a federal budget reconciliation bill that would drastically change the way students pay for college.
The bill aims to save the federal government over $330 billion, supporting President Trump’s goals of tax relief, cutting government spending, and reducing the federal deficit.
The bill was marked up on Tuesday as part of the fiscal 2025 budget resolution. The legislation will now head to the Budget Committee and, if advanced, would move to the House Floor.
As written, the bill would hold colleges financially responsible for students struggling to repay loans, reasoning the university is responsible if degrees lack a return on investment.
During the markup, Indiana Rep. Mark Messmer noted that a third of student loans and Pell Grants are provided to students in programs with a negative return on investment.
“The reforms in this bill bring responsibility and accountability to our colleges and universities,” Messmer said. “Institutions should be held financially responsible if their expensive programs fail to equip graduates with skills needed for strong employment opportunities.”
Messmer said while college prices have tripled since Baby Boomers were in school, college graduate earnings have not grown significantly since the turn of the century, leading to nearly $1.6 trillion in federal student loan debt.
“Our current system provides no incentives for institutions to care about what they charge or the success of their graduates,” Messmer said. “Institutions promise that their high prices are worth the investment but they have no need to follow through.”
The bill includes Pell Grant reforms that aim to target aid to low-income students and change the enrollment eligibility to require students to be full-time and enrolled in 15 credit hours per semester.
Indiana University Executive Director of Financial Wellness and Education Phil Schumann noted that this change will affect people at IU campuses around the state.
“Fifteen credit hours is a lot,” Schumann said. “It's a lot of load for somebody to take on, and some people are able to do it. Some people may not have the ability to do it, and that's going to be a really hard thing for them to figure out if they can actually take that extra class so they can maintain eligibility.”
Phil Schumann is the Executive Director of Financial Wellness and Education at IU. (Alaina Davis/WTIU News)
The plan caps undergraduate federal student loans at $50,000, a raise from the previous $31,000 limit. It also ends the GradPLUS program, which previously allowed unlimited borrowing. New limits are set at $100,000 for graduate students and $150,000 for professional students.
Parent PLUS loans would also be capped at $50,000, which can only be taken out if students max out their loan options.
Schumann said that higher education professionals support the idea that students should borrow before their parents.
“One of the things we've advocated for years is that we don't want parents to borrow on behalf of their students, just because a parent's time horizon until they get to retirement is a lot shorter than a student's,” Schumann said. “Their risk is higher.”
The plan also prevents future executive actions on blanket loan forgiveness and eliminates Biden-era regulations such as the SAVE Plan. The plan instead offers two student loan repayment options: a fixed plan and an income-driven repayment plan. The income-driven plan includes payments determined by income, a minimum monthly payment and protections against growing debt.
Schumann said federal student aid plans need to be considered heavily to ensure they better the lives of students and borrowers.
“I'm hopeful that this idea doesn't come back to bite us,” Schumann said, “that it actually leads to a collective decision on how we can best treat and make sure that students and future borrowers have the ability to repay loans after they graduate.”
