Latest news with #RepaymentAssistancePlan
CNBC
20-06-2025
- Business
- CNBC
Here's what your student loan bill could be under new repayment plan in Republicans' 'big beautiful' bill
Republicans' One Big Beautiful Bill Act could result in higher monthly payments for many federal student loan borrowers, a new analysis finds. If the legislation is enacted as drafted, a student loan borrower earning roughly $80,000 a year (the median for a bachelors' degree holder in 2024) would have a monthly payment of $467 under the GOP-proposed "Repayment Assistance Plan," or RAP, according to recent findings by the Student Borrower Protection Center. That compares with a $187 monthly bill on the Biden administration's now-blocked SAVE, or Saving On A Valuable Education plan. No matter their income, borrowers face higher monthly payments under RAP compared to SAVE, the analysis found. For lower incomes, the difference may be just $10 per month; for higher earners, the new repayment plan can be as much as $605 per month pricier. Depending on their income, some federal student loan borrowers also face higher payments on RAP than they would have on the U.S. Department of Education's other income-driven repayment plans, including PAYE, or Pay As You Earn and IBR, or Income-Based Repayment. However, some borrowers on PAYE or IBR plans would have a smaller bill under RAP. For example, a borrower with a roughly $60,000 annual income would pay $250 a month on RAP, and $304 on PAYE, the SBPC found. The House advanced its version of the One Big Beautiful Bill Act in May. The Senate Committee on Health, Education, Labor and Pensions released its budget bill recommendations related to student loans on June 10. Senate lawmakers are preparing to debate the massive tax and spending package. Under the Republican proposals, there would be just two repayment plan choices for borrowers who take out loans after July 1, 2026, compared with roughly a dozen options now. After graduation, those student loan borrowers could either enroll in a standard repayment plan with fixed payments, or a single income-based repayment plan: RAP. Here's a look at other stories affecting the financial advisor business. Under RAP, monthly payments would typically range from 1% to 10% of a borrower's income; the more they earn, the bigger their required payment. There would be a minimum monthly payment of $10 for all borrowers. The new plan would fail to provide many borrowers with an affordable monthly bill — the goal of Congress when it established income-driven repayment plans in the 1990s, Michele Zampini, senior director of college affordability at The Institute for College Access & Success, recently told CNBC. "If Republicans' proposed 'Repayment Assistance Plan' is the only thing standing between borrowers and default, we can expect many to suffer the nightmarish experience of default," Zampini said. Meanwhile, current income-driven repayment plans now conclude in loan forgiveness after 20 years or 25 years. But RAP wouldn't lead to debt erasure until 30 years. "This kind of financial drag could further delay major life milestones like homeownership, starting a family, or saving for retirement," said Doug Boneparth, a certified financial planner and the founder and president of Bone Fide Wealth in New York. He is a member of CNBC's Financial Advisor Council. There's also "an emotional toll" to carrying student debt for so long, said Cathy Curtis, the founder of Curtis Financial Planning in Oakland, California. She is also a member of CNBC's Financial Advisor Council. "It reinforces the feeling of being stuck — especially for those who've already struggled to access opportunity," Curtis said. Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor, and Pensions Committee, has said his party's plans would lift the burden on taxpayers of subsidizing college graduates' loan payments. ″[Former President Joe] Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college," Cassidy said in a statement on June 10. He said his committee's bill would save an estimated $300 billion out of the federal budget.
NBC News
18-06-2025
- Business
- NBC News
Three student loan changes in Republican bill: Getting out of debt would be 'extremely hard,' advocate says
Republicans' 'big beautiful' bill, if enacted as drafted, would make some of the biggest changes to the federal student loan system in decades. GOP House and Senate lawmakers' proposals would eliminate several repayment plans, keep borrowers in debt longer and roll back relief options for those who become unemployed or run into another financial challenge. The House advanced its version of the One Big Beautiful Bill Act in May. The Senate Committee on Health, Education, Labor and Pensions released its budget bill recommendations related to student loans on June 10. Senate lawmakers are preparing to debate the massive tax and spending package. Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor, and Pensions Committee, said his party's plans would lift the burden on taxpayers of subsidizing college graduates' loan payments. ″[Former President Joe] Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college,' Cassidy said in a statement on June 10. He said his committee's bill would save an estimated $300 billion out of the federal budget. However, consumer advocates say that the legislation will deepen a lending crisis in which millions of borrowers are already struggling to pay off the debt from their education. 'It's not about fiscal responsibility, it's about doing some funny math that justifies tax cuts,' said Astra Taylor, co-founder of the Debt Collective, a union for debtors. 'It's going to be extremely hard for people to get out of debt with these changes,' Taylor said. Here are three big proposals in the GOP bills to overhaul federal student lending. 1. Fewer repayment plans, larger bills Under the Republican proposals, there would be just two repayment plan choices for new borrowers, compared with roughly a dozen options now. Student loan borrowers could either enroll in a standard repayment plan with fixed payments, or an income-based repayment plan known as the ' Repayment Assistance Plan,' or RAP. Under RAP, monthly payments would typically range from 1% to 10% of a borrower's income; the more they earn, the bigger their required payment. There would be a minimum monthly payment of $10 for all borrowers. A typical student loan borrower with a college degree could pay an extra $2,929 per year if the Senate GOP proposal of RAP is enacted, compared with the Biden administration's now-blocked SAVE plan, according to a recent analysis by the Student Borrower Protection Center. The new plan would fail to provide many borrowers with an affordable monthly bill — the goal of Congress when it established income-driven repayment plans in the 1990s, said Michele Zampini, senior director of college affordability at The Institute for College Access & Success. 'If Republicans' proposed 'Repayment Assistance Plan' is the only thing standing between borrowers and default, we can expect many to suffer the nightmarish experience of default,' Zampini said. 2. Longer timelines to loan forgiveness As of now, borrowers who enroll in the standard repayment plan typically get their debt divided into 120 fixed payments, over 10 years. But the Republicans' new standard plan would provide borrowers fixed payments over a period of between 10 years and 25 years, depending on how much they owe. For example, those with a balance exceeding $50,000 would be in repayment for 15 years; if you owe over $100,000, your fixed payments will last for 25 years. Meanwhile, current income-driven repayment plans now conclude in loan forgiveness after 20 years or 25 years. But RAP wouldn't lead to debt erasure until 30 years. 'Thirty years is your adult life,' Taylor said. If RAP becomes law, she said, 'We anticipate an explosion of senior debtors.' 3. Fewer ways to pause bills House and Senate Republicans are also calling for the elimination of the economic hardship and unemployment deferments. Those deferments allow federal student loan borrowers to pause their monthly bills during periods of joblessness or other financial setbacks, often without interest accruing on their debt. Under both options, which have existed for decades, borrowers can avoid payments for up to three years. Under the Senate Republicans' proposal, student loans received on or after July 1, 2026, would no longer qualify for the unemployment deferment or economic hardship deferment. The House plan does away with both deferments a year earlier, on July 1, 2025. 'These protections enable borrowers to stay in good standing on their loans while they get back on their feet,' Zampini said. 'Without them, borrowers who suddenly can't afford their payments will have little recourse, and many will likely enter delinquency and eventually default,' she said.
CNBC
18-06-2025
- Business
- CNBC
3 student loan changes in Republican bill: Getting out of debt would be 'extremely hard,' advocate says
Republicans' "big beautiful" bill, if enacted as drafted, would make some of the biggest changes to the federal student loan system in decades. GOP House and Senate lawmakers' proposals would eliminate several repayment plans, keep borrowers in debt for longer and roll back relief options for those who become unemployed or run into another financial challenge. The House advanced its version of the One Big Beautiful Bill Act in May. The Senate Committee on Health, Education, Labor and Pensions released its budget bill recommendations related to student loans on June 10. Senate lawmakers are preparing to debate the massive tax and spending package. Sen. Bill Cassidy, R-La., chair of the Senate Health, Education, Labor, and Pensions Committee, said his party's plans would lift the burden on taxpayers of subsidizing college graduate's loan payments. "Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college," Cassidy said in a statement on June 10. He said his committee's bill would save an estimated $300 billion from the federal budget. More from Personal Finance:'SALT' deduction in limbo as Senate Republicans unveil tax planHow Senate GOP 'no tax on tips' proposal differs from House planSenate tax bill includes $1,000 baby bonus in 'Trump accounts' However, consumer advocates say that the legislation will deepen a lending crisis in which millions of borrowers are already struggling to pay off the debt from their education. "It's not about fiscal responsibility, it's about doing some funny math that justifies tax cuts," said Astra Taylor, co-founder of the Debt Collective, a union for debtors. "It's going to be extremely hard for people to get out of debt with these changes," Taylor said. Here are three big proposals in the GOP bills to overhaul federal student lending. Under the Republican proposals, there would be just two repayment plan choices for new borrowers, compared with roughly a dozen options now. Student loan borrowers could either enroll in a standard repayment plan with fixed payments, or an income-based repayment plan known as the "Repayment Assistance Plan," or RAP. Under RAP, monthly payments would typically range from 1% to 10% of a borrower's income; the more they earn, the bigger their required payment. There would be a minimum monthly payment of $10 for all borrowers. A typical student loan borrower with a college degree could pay an extra $2,929 per year if the Senate GOP proposal of RAP is enacted, compared to the Biden administration's now-blocked SAVE plan, according to a recent analysis by the Student Borrower Protection Center. The new plan would fail to provide many borrowers' with an affordable monthly bill — the goal of Congress when it established income-driven repayment plans in the 90s, said Michele Zampini, senior director of college affordability at The Institute for College Access & Success. "If Republicans' proposed 'Repayment Assistance Plan' is the only thing standing between borrowers and default, we can expect many to suffer the nightmarish experience of default," Zampini said. As of now, borrowers who enroll in the standard repayment plan typically get their debt divided into 120 fixed payments, over 10 years. But the Republicans' new standard plan would provide borrowers fixed payments over a period between 10 years and 25 years, depending on how much they owe. For example, those with a balance exceeding $50,000 would be in repayment for 15 years; if you owe over $100,000, your fixed payments will last for 25 years. Meanwhile, current income-driven repayment plans now conclude in loan forgiveness after 20 years or 25 years. But RAP wouldn't lead to debt erasure until 30 years. "Thirty years is your adult life," Taylor said. If RAP becomes law, she said, "We anticipate an explosion of senior debtors." House and Senate Republicans are also calling for the elimination of the economic hardship and unemployment deferments. Those deferments allow federal student loan borrowers to pause their monthly bills during periods of joblessness or other financial setbacks, often without interest accruing on their debt. Under both options, which have existed for decades, borrowers can avoid payments for up to three years. Under the Senate Republicans' proposal, student loans received on or after July 1, 2026, would no longer qualify for the unemployment deferment or economic hardship deferment. The House plan does away with both deferments a year earlier, on July 1, 2025. "These protections enable borrowers to stay in good standing on their loans while they get back on their feet," Zampini said. "Without them, borrowers who suddenly can't afford their payments will have little recourse, and many will likely enter delinquency and eventually default," she said.
Newsweek
13-06-2025
- Business
- Newsweek
Student Loan Update: How Republican Bill Would Impact Married Borrowers
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Senate Republicans are eyeing a change to student loan payments that could have key implications for married couples. Newsweek reached out to the Senate Health, Education, Labor and Pensions (HELP) committee for comment via email on Friday. Why It Matters Senate Republicans unveiled the first public draft of the reconciliation bill this week after the House of Representatives passed President Donald Trump's "Big Beautiful Bill Act" last month. The bill would reshape the federal student loan system and includes one change from the House bill that, if not adjusted, could lead to higher payments for married couples who have borrowed student loans. What To Know Under current repayment plans, married couples who file their taxes as married-filing-jointly can have their income-driven repayment (IDR) plans based on their own adjusted gross income (AGI), rather than their combine income. This means they are eligible for lower monthly payments on their federal student loans. House Republicans' restructuring of the student loan payment system under the "Big Beautiful Bill Act" would extend that treatment for married couples under current payment plans as well as for future borrowers under the proposed Repayment Assistance Plan. However, the Senate plan appears to omit the line of text that would allow married borrowers not filing jointly to base payments on their own AGI, Forbes reported on Friday. The House bill reads: "The term 'adjusted gross income', when used with respect to a borrower, means the adjusted gross income (as such term is defined in section 62 of the Internal Revenue Code of 1986) of the borrower (and the borrower's spouse, as applicable) for the most recent taxable year, except that, in the case of a married borrower who files a separate Federal income tax return, the term does not include the adjusted gross income of the borrower's spouse." However, the Senate bill states: "The term 'adjusted gross income', when used with respect to a borrower, means the adjusted gross income (as such term is defined in section 62 of the Internal Revenue Code of 1986) of the borrower (and the borrower's spouse, as applicable) for the most recent taxable year," This could lead to higher payments, Forbes reported. Forbes reported that borrowers under the new Repayment Assistance Plan (RAP) who have an AGI of $50,000 would pay about $208 per month under the House plan, which would allow them to file separately from their spouse. Under the Senate plan, if their spouse also makes $50,000, their payment could increase to $830 per month, regardless of how they file. This would apply to individuals who begin borrowing student loans in July 2026. It wouldn't affect borrowers who are already on an income-based repayment plan, Forbes reported. Earlier this year, a court filing from the Trump administration indicated they were supportive of reverting to earlier rules requiring spousal income to be counted in IDR plans but later clarified that was a mistake, reported Business Insider. Student loan borrowers gather near the White House to urge the cancellation of student loan debt on May 12, 2022, in Washington, D.C. Student loan borrowers gather near the White House to urge the cancellation of student loan debt on May 12, 2022, in Washington, We, The 45 Million What People Are Saying Alan Collinge, founder of Student Loan Justice, told Newsweek: "The Senate should be the adult in the room with this dangerous legislation, which really is a giveaway to the student loan industry and the colleges. Instead, we're seeing them go the other way. This will hurt the GOP badly, including with their own base. I hope the wiser Republicans in the Senate will stand up to this, and include—at a minimum—the return of standard bankruptcy rights to these loans." He described the House bill as a "massive giveaway to both the colleges and the Department of Education and its contractors," noting that it would increase student loan borrowing "like nothing we've ever seen before." "Limits for undergraduate borrowing will increase by nearly $20,000 per borrower. This provision, alone, would add hundreds of billions onto the debt that the freshman class of '26, and every class thereafter," he said. Senator Bill Cassidy, the Louisiana Republican who leads the Senate HELP committee, wrote in a statement: "We need to fix our broken higher education system, so it prioritizes student success and ensures Americans have the skills to compete in a 21st century economy. President Trump and Senate Republicans are focused on delivering results for American families and this bill does just that. While Biden and Democrats unfairly attempted to shift student debt onto taxpayers that chose not to go to college, Republicans are taking on the root causes of the student debt crisis to lower the cost of tuition and improve Americans' access to opportunities that set them up for success." Sameer Gadkaree, president of The Institute for College Access & Success, wrote in a statement earlier this week: "The Senate reconciliation bill's higher education provisions would cause widespread harm to American families by making college more expensive, making student debt much harder to repay, unleashing an avalanche of student loan defaults, and rolling back basic protections for students who are defrauded by their college—all to fund tax cuts for the wealthy." What Happens Next? It's yet to be seen if the bill will pass in its current form or whether that measure could be amended throughout the legislative process.
CNBC
02-06-2025
- Business
- CNBC
Trump's 'big, beautiful bill' could mean 4 major changes for student loan borrowers
In the coming weeks, the U.S. Senate is expected to consider, amend and eventually vote on President Donald Trump's budget agenda, called the "One Big Beautiful Bill Act." The House passed the bill on May 22 by a single vote. The massive bill includes a variety of provisions aiming to cut government spending and raise revenue to address the federal deficit. Major provisions include making Trump's 2017 tax policy permanent where it would otherwise expire at the end of the year and cutting Medicaid benefits. Efforts to reform the federal student loan program are also included within the bill's 1,000-plus pages. The section addressing the nation's student debt would create a new income-based repayment plan, change eligibility rules for Pell Grants, aim to hold schools accountable for students' debt loads and more. The bill has an uncertain future in the Senate, but as it stands, here are four of the impacts current and future federal student loan borrowers could see. Critics of the current federal student loan system often contend that borrowers have too many repayment options, which are both confusing and overwhelming. If enacted as currently written, future federal borrowers will have just two repayment plan options: an updated version of the standard repayment plan and a new income-based plan known as the Repayment Assistance Plan. Borrowers with loans disbursed before July 1, 2026 will have the option of keeping their current plan, with the exception of the income-contingent repayment plan. Currently, the standard repayment plan sets borrowers' monthly payment at a fixed number, paying off their loans in 10 years. The new standard plan would offer a fixed payment with loan terms spanning from 10 to 25 years, based on the amount borrowed, according to a House committee fact sheet. The Repayment Assistance Plan, or RAP, will replace the currently available income-driven plans except for the Income-Based Repayment plan. On RAP, borrowers' monthly bill would be between 1% and 10% of their income, depending on how much they earn. Borrowers would pay a minimum of $10 a month and any interest exceeding their minimum monthly payment would be waived. Monthly payments for each income bracket are set as 1% of adjusted gross income for borrowers earning between $10,000 and $20,000 a year, 2% of income for those earning between $20,000 and $30,000 a year and so forth. Borrowers earning $100,000 or more will pay a maximum of 10% of their income on RAP. The plan also offers a matching principal payment of up to $50, so borrowers whose monthly payment is less than that or only covers interest can still see their balance shrink. Borrowers can have any remaining debt forgiven after 30 years of on-time monthly payments. Payments on RAP will qualify toward Public Service Loan Forgiveness. Undergraduates will have a borrowing cap of $50,000 over the course of their studies beginning with loans disbursed on July 1, 2026, up from the current $31,000 aggregate limit. Annually, students will have a cap on federal loans equal to the national median cost for their program or similar fields of study, and schools will have the ability to set lower limits. Graduate borrowers will have a cap of $100,000 or $150,000 for professional programs, including medicine. Parents will also have a $50,000 total limit on federal loans. Parents and grad students currently have no borrowing limit. The proposal also eliminates subsidized loans, which currently allow borrowers to avoid accruing interest on their debt during certain periods, such as while they are in school. Under the proposal, borrowers will lose the ability to have their loan payments paused when they are facing economic hardship, including unemployment. For loans disbursed after July 1, 2026, the proposal eliminates the option current borrowers have to request an economic hardship deferment for up to three years. Additionally, the limit on discretionary forbearances would drop to nine months over a 24-month period, from the current 12-month limit and three-year cumulative maximum. The proposal limits future administrations' ability to alter repayment plans or enact related policies. The bill would, going forward, require the Secretary of Education to demonstrate that any new regulations or executive actions would not increase costs for the federal government and prevents the Secretary from enacting any policies that do not meet that requirement. Additionally, the bill would repeal regulations for schools like the gainful employment rule, which requires institutions to demonstrate their educational offerings are sufficient to help students land well-paying jobs. Schools that do not meet gainful employment expectations risk losing access to federal funding. The gainful employment rule is intended to help students avoid low-value programs that leave them with too much debt and minimal earning potential. ,
