What The Big Student Loan Senate News Means For Borrowers, Parents, And Students
WASHINGTON, DC - JUNE 24: U.S. Senate Majority Leader John Thune (R-SD) speaks to reporters during ... More the weekly luncheons at Capitol Hill on June 24, 2025 in Washington, DC. Senate Republicans are trying to pass reconciliation legislation that would remake federal student loan repayment. (Photo by)
Millions of federal student loan borrowers got some unexpected good news this week, as Republican-led plans to make sweeping reforms to federal student loan repayment and loan forgiveness programs have stalled, at least temporarily. Unless Senate Republicans can come up with a solution, key elements of their legislative plans may not survive.
The latest development is associated with budget reconciliation, a complicated legislative process that allows lawmakers to pass legislation with simple majorities in the House and the Senate, effectively bypassing a Senate filibuster (which requires 60 votes to overcome). Because Republicans have only 53 seats in the Senate, and they do not want to have to reply on Democratic votes, they are trying to push through President Donald Trump's main legislative priorities – including huge tax cuts and major reductions in government spending – through reconciliation. House Republicans successfully passed their reconciliation bill in May.
But Senate Republicans have hit a snag. On Thursday, the Senate Parliamentarian, who is a nonpartisan official tasked with interpreting and issuing rulings on senate rules, determined that several provisions of the Senate reconciliation bill violate what's known as the Byrd Rule. This rule requires that reconciliation legislative comply with certain parameters, including that the provisions must directly relate to the budget, can't contain unrelated policy priorities, and can't grow the deficit beyond the budget window provided in the bill. The Senate Parliamentarian ruled that several provisions that would remove or curtail popular student loan programs do not pass the Byrd Rule, and therefore would require 60 votes to pass the Senate. If the ruling stands, this could effectively doom these provisions, as Democrats are not expected to join Republicans in supporting the legislation.
But this isn't the end of the process, and much uncertainty remains. Here's what student loan borrowers should know, and how the new Senate update may impact borrowers, parents, and students.
Current Borrowers Could Maintain Access To Existing Student Loan Repayment Plans
The GOP reconciliation bills would, if enacted, fundamentally reshape federal student loan repayment by repealing most existing repayment plans – including for current borrowers. The changes would hit current borrowers enrolled in income-driven repayment particularly hard. Under the proposals, the ICR, PAYE, and SAVE plans would all be repealed, and potentially a newer and more affordable version of IBR, as well. All income-driven repayment plans are designed to provide reasonable monthly payments tied to income and family size, with student loan forgiveness after 20 or 25 years of payments. But with the repeal of these plans, current borrowers would be switched to a modified version of the 'older' IBR plan. Advocates estimated that some borrowers could see their payments skyrocket, since IBR is a much more expensive plan than PAYE and SAVE.
But the Senate Parliamentarian's ruling this week scrambles these proposals. The Parliamentarian ruled that repealing these student loan repayment plans for current borrowers would violate the Byrd Rule, thus requiring 60 votes to pass the Senate. It is highly unlikely that seven Senate Democrats would join 53 Senate Republicans to pass this bill. If the ruling holds, it could mean that current student loan borrowers get to keep their repayment plan.
New Student Loan Borrowers Would Still Lose Access To Current Repayment Plans
Importantly, however, the Senate Parliamentarian's ruling only applies to current borrowers who are in repayment on their student loans. The Parliamentarian ruled that the provisions of the reconciliation bill that would cut off access to current repayment plans for new student loan borrowers going forward would not violate the Byrd Rule and, therefore, could remain in the bill.
This means that for borrowers who take out new student loans on or after July 1, 2026, under the provisions of the bill, they would only have access to two repayment plans. One would be a Standard plan, with monthly payments stretched out over a term ranging from 10 to 25 years, depending on the original loan balance. The other would be a new income-driven repayment plan called the Repayment Assistance Plan, or RAP. RAP would use a repayment formula that differs in many ways from current IDR options, but would likely be relatively affordable for many borrowers. Payments under RAP would be higher than current IDR plans for the lowest-income borrowers, which has drawn criticism from many borrower advocates. RAP would also have a 30-year repayment term before a borrower could qualify for student loan forgiveness – far longer than the 20- and 25-year terms presently available. But RAP also would have some other benefits including an interest subsidy designed to prevent runaway balance growth, and the ability to direct some payments to loan principal.
Parent PLUS Borrowers Could Maintain Access To Income-Driven Student Loan Repayment Plan
Parent PLUS borrowers may also benefit if the Senate Parliamentarian's ruling holds. Under both the House and Senate versions of the reconciliation bill, most Parent PLUS borrowers could be completely cut off from income-driven repayment plans, as the bills would repeal ICR – the only income-driven plan that Parent PLUS borrowers are eligible to enroll in. While consolidated Parent PLUS loans that are already enrolled in ICR at the time of the bill's passage would be grandfathered in (and moved to the IBR plan, like other borrowers in the repealed plans), all other Parent PLUS borrowers would have no option to repay their student loans in accordance with their income, as they wouldn't be eligible for RAP. Some critics have warned that without any affordable repayment plan option, Parent PLUS loan defaults could skyrocket, particularly for older borrowers on a fixed income.
If the repeal of ICR drops from the GOP Senate bill, current Parent PLUS borrowers who are already in repayment could continue to be eligible for the ICR plan. However, taking out new student loans or consolidating their loans after July 1, 2026 would make them a 'new borrower' and then ineligible. So, if the Senate Parliamentarian's ruling holds, Parent PLUS borrowers would still need to be strategic about maintaining ICR eligibility.
GOP Senators Are Racing To Figure Out Whether Student Loan And Other Provisions Can Be Salvaged
Despite the setback, congressional Republicans are still trying to figure out a path forward in light of the Senate Parliamentarian's ruling. And President Donald Trump has made clear that he wants the legislation to remain on track for passage by July 4th, which was the original goal.
'I think he wants us to do what we can do to get him a bill' by the 4th, Senate Majority Leader John Thune (R-SD) told reporters after meeting with the president on Thursday.
Senate Republicans have a few choices. They can vote to override the Parliamentarian, although Thune has said quite clearly that this is not on the table, despite pressure from some conservative House Republicans. They can drop the contested provisions entirely, or put them up for a vote on the Senate floor knowing that they will not reach the 60-vote threshold. Or, more likely, Senate GOP lawmakers will rewrite elements of the bill so that it could comply with Senate reconciliation rules.
Ultimately, what happens during the next week will likely determine the fate of several key federal student loan repayment programs, and what millions of borrowers will have to pay on their student loans in the coming years.
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