New Bill Scraps Student Loan Forgiveness, Repayment Plans, and Borrower Protections

Alright, let's talk about the Restoring College Access and Affordability Act, because this one could seriously shake up how a lot of us deal with student debt and college costs. Basically, this bill is looking to hit the rewind button on a whole bunch of recent changes to student loans and Pell Grants, but not necessarily in a way that feels like a relief for everyone.

The Big Loan Rollback: What's Out?

First off, if you've been banking on certain student loan programs, listen up. This bill repeals Section 81001 of the reconciliation act, which means previous loan limits are back. But here's the kicker: it also wipes out three big provisions related to student loan repayment from that same act. We're talking about the loan repayment program, the deferment and forbearance provisions, and the public service loan forgiveness (PSLF) program. That's right, PSLF, the one that helps folks working in non-profits or government get their loans forgiven after a decade of payments? Gone. Same goes for those options to pause or reduce your payments when things get tight. For anyone who's been working towards that forgiveness or relying on those flexible payment options, this is a massive change, effectively pulling the rug out from under existing plans and expectations.

Pell Grants Get a Second Look

On the Pell Grant side, there's some good news for students. The bill repeals two sections from a 2025 reconciliation bill that had messed with Pell Grant rules. Specifically, it undoes Section 83001, which had changed eligibility requirements, and Section 83004, which had made other grant aid reduce your Pell amount. This means the old, more favorable rules for Pell Grant eligibility and how other scholarships affect your award are back. So, if you're a student from a lower-income background, this could mean more Pell Grant money in your pocket, which is definitely a positive.

What's a 'Covered Educational Program' Anyway?

Then there's a bit of technical jargon that could have real-world consequences. Section 5 amends the Higher Education Act of 1965 to replace "educational program" with "covered educational program" when it comes to ineligibility based on low earning outcomes. This "covered program" is now specifically defined as something that prepares you for gainful employment, awards an associate's or bachelor's degree, or a graduate/professional degree. Why does this matter? Well, if you're in a program that doesn't quite fit these definitions and historically hasn't led to high earnings, your program could be on the chopping block for federal aid eligibility. This could disproportionately affect students in vocational training or niche fields that are valuable but not necessarily high-earning.

Borrower Beware: Protections Disappearing

This bill also takes aim at some key borrower protections. It repeals Section 85001 and Section 85002 of the reconciliation act, which means borrower defense to repayment rules and closed school discharge rules are out the window. These are the provisions that allowed students to get their loans discharged if their school defrauded them or suddenly shut down. Without these, if your college pulls a fast one or goes belly-up, you might be left holding the bag on those student loans, with little recourse. That's a huge risk shift onto students.

Private College Endowments Face a Higher Tax Bill

Finally, for the big-money institutions, the bill modifies the excise tax on the endowment income of certain private colleges and universities. It raises the tax rate on net investment income to 1.4 percent, up from the current applicable percentage. This change kicks in for taxable years starting after December 31, 2025. While it might not affect your personal budget directly, it could impact how these wealthier institutions manage their finances and, potentially, their tuition costs or student support programs down the line.