What are the key changes proposed for student loan repayment?

The Senate Republican proposal introduces two repayment plan choices for new borrowers after July 1, 2026: a standard plan with fixed payments over 10-25 years based on debt amount, and an income-based repayment Assistance Plan (RAP) with payments from 1% to 10% of income.

How does the Repayment Assistance Plan (RAP) work?

RAP sets monthly payments as a percentage of a borrower's income, typically between 1% and 10%, with a minimum payment of $10. Unlike current income-driven repayment plans, RAP extends the repayment period to 30 years before loan forgiveness.

What are the potential drawbacks of the proposed student loan repayment changes?

Critics argue the changes could lead to increased defaults due to longer repayment periods and higher overall costs for borrowers. A typical borrower could pay an extra $2,929 per year compared to the blocked Biden administration's SAVE plan.

who supports the Senate GOP's student loan repayment proposal?

Supporters, like Senator Bill Cassidy, argue the proposal protects taxpayers who did not attend college from unfairly bearing the burden of student loan debt, estimating it would save taxpayers at least $300 billion.

How many americans are currently affected by student loan debt?

more than 42 million Americans hold student loans, with outstanding federal education debt exceeding $1.6 trillion. Over 5 million borrowers were in default as of April 2025.

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Home » Business » GOP Student Loan Plan: Default Rates Could Surge – Expert Warns

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GOP Student Loan Plan: Default Rates Could Surge – Expert Warns

by Priya Shah – Business Editor June 15, 2025

written by Priya Shah – Business Editor June 15, 2025

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Senate GOP Student Loan Repayment Plan Sparks Default Concerns

Priya Shah – Business Editor Priya Shah is a financial journalist and Business Editor at World Today News. She specializes in global markets, innovation, and economic trends, making complex business stories accessible to all readers. Priya’s reporting background spans top financial publications and startup hubs worldwide.