The push by former President Donald Trump and Senate Republicans to introduce sweeping reforms to federal student loan repayment options has been dealt a serious blow, following a pivotal ruling by Senate parliamentarian Elizabeth MacDonough. Her recent decision makes it clear that the proposed overhaul to repayment plans cannot be applied to existing borrowers.
The June 25 advisory from MacDonough — the Senate’s chief authority on procedural matters — is a setback for GOP legislators trying to appease fiscal conservatives by slashing federal expenditures within the broader tax and spending bill. This comprehensive legislative package is being fast-tracked under budget reconciliation rules that require all components to directly affect federal spending to qualify for passage by a simple majority.
The ruling comes as lawmakers race to push the bill through the Senate, with the White House urging for its finalization by the July 4 self-imposed deadline. But uncertainty looms over whether Republican leaders can secure the minimum 50 votes necessary, especially with no backing from Democrats.
The bill’s architects had hoped to restructure the federal student loan system by consolidating multiple repayment options into two core plans: a standard plan requiring fixed payments for 10 to 25 years depending on the loan size, and an income-driven “Repayment Assistance Plan.” While the GOP aimed to make this new structure mandatory for all borrowers, the parliamentarian ruled that only future loan recipients — not those already in repayment — can be forced into the revised framework.
The implications are significant. Over 40 million Americans with existing federal student loans, including approximately 8 million currently enrolled in President Joe Biden’s SAVE plan, will not be subject to the new repayment scheme. That plan’s future, however, remains uncertain, pending a court ruling on its legality.
In May, the nonpartisan Congressional Budget Office estimated that modifying repayment terms for current borrowers could result in over $160 billion in federal savings annually, making the ruling a major fiscal pivot.
Additionally, MacDonough rejected several other components of the bill. These included proposals to disqualify certain non-citizen students from financial aid, restrict student loan relief for doctors and dentists, and expand Pell Grant access to short-term job training programs. While these measures failed under budget rules, they may still pass if Republicans garner 60 votes — meaning at least 10 Democratic senators would need to cross party lines.
