Trump's Trials - Republicans plan to overhaul the federal student loan system. Here's what to know

Episode Date: April 30, 2025

Republicans on the House education committee publicly unveiled their plan Tuesday to remake the federal student loan system while also cutting more than $330 billion in federal spending to help offset the cost of extending President Trump's tax cuts.The Republican proposal includes eliminating previous income-contingent loan repayment options and replacing them with one "Repayment Assistance Plan." It also ends the Grad PLUS loan program, sets strict limits on Parent PLUS loans and envisions a new system whereby colleges and universities are forced to reimburse the federal government for a share of the debt when their students fail to repay their loans. NPR's Steve Inskeep talks with Cory Turner.Support NPR and hear every episode of Trump's Terms sponsor-free with NPR+. Sign up at plus.npr.org.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

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to make big changes to the federal student loan system and cut spending along the way. Their plans affect repayment options and Pell grants and also offers a new way to hold colleges accountable. NPR education correspondent Corey Turner is lending us some of his time to talk about this. Corey, good morning. Good morning, Steve. What are the proposals which we should clarify are not yet law?

Yeah, well, it's hard to overstate just how much Republicans want to do here. They want to eliminate plus loans for graduate students. They also want to cap parent plus loans for parents who are going to help their kids pay for college. Okay. And then they want to eliminate subsidized loans for undergraduate students. This is a big one. That means, Steve, in the future, if you take out a loan to go to college, the government would no longer cover the interest while you're in school. Oh, big change. Okay.

Yeah. And then there are changes to the rules for Pell Grants, which are for low-income students, don't need to be paid back. Republicans want to expand the program to give students access to use Pell to cover short-term workforce training, but they also wanna make it harder to qualify for a full Pell award by increasing the number of credit hours a student has to take each year. And then there's one more big change here

when it comes to the aid students get, and that is a seismic shift in borrower's repayment options. Republicans want to simplify things down to really two basic repayment plans. There's a standard plan with a fixed monthly payment, looks a lot like the old, but then there is what they're calling a repayment assistance plan that bases monthly payments on borrower's income, but unlike the old income plans that offered forgiveness after 20 or 25 years, this new one could last for 30. Oh, that's interesting. So every one of these details doesn't matter much if you don't have a student loan, but

could affect your payments if you're going into college, if you're thinking about this, if you have experience with student loans. And what is the change on the university side, the colleges that get paid? Yeah, there's a really big idea here Republicans are putting out. They're proposing what they're calling skin in the game accountability for colleges. Basically, if colleges and universities want access to the federal student loan program, which trust me, Steve, they do, they're going to have to agree to reimburse the government for a share of the debt when

their students don't repay their loans. While Republicans are pushing this new way to hold schools accountable though, they are also planning to end some pretty important past protections for students, especially for borrowers who attend schools that close suddenly and for borrowers who say they were defrauded by their schools. What's the goal of all these changes? Well, there are really two end goals here. Republicans have been talking for a while about wanting to reform the student loan system to make it simpler, but also to try to use the levers of government to rein in rising

college costs. The other goal is Republicans want to extend President Trump's massive tax cuts. So Republican committee chairs in the House were told to come up with deep cuts that could offset the high cost of those tax cuts. Education committee Republicans say these changes to federal student aid will help them save more than $330 billion. For their part, Democrats have uniformly decried these cuts, saying they're about tax cuts for the rich and they will make it harder for low-income students to pay to college. Corey, thanks very much for the update. Really appreciate it.

You're welcome, Steve. That's NPR's Corey Turner, who's covering proposed changes to student loans. Before we wrap up, a reminder, you can find more coverage of the Trump administration on the NPR Politics Podcast, where you can hear NPR's political reporters break down the day's biggest political news, with new episodes every weekday afternoon. And thanks as always to our NPR Plus supporters who hear every episode of the show without sponsor messages. You can learn more at plus.npr.org.

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