Press Release: Budget Reconciliation Bill Passes in the Senate, Opening the Door to Skyrocketing Payments for Millions of Americans with Student Debt

FOR IMMEDIATE RELEASE

July 01, 2025

Contact:

Natalia Abrams

natalia@studentdebtcrisis.org

Washington D.C. – The Student Debt Crisis Center (SDCC) strongly condemns the Senate's passage of the budget reconciliation package, which will remove vital student loan borrower protections, cut higher education funding, eliminate long-standing Income-Driven Repayment (IDR) plans, and more. This bill will have severe ramifications for millions of working and middle-class Americans with student loan debt, leaving them and their families in financial turmoil. 

“This reconciliation bill will be catastrophic for millions of Americans by restricting access to higher education and exacerbating the student debt crisis for both federal and private student loans,” said SDCC President Natalia Abrams. “While it is difficult to imagine how much worse the student debt crisis can become, this reconciliation bill does exactly that.”

This reconciliation bill will actively harm Americans by:

• Capping federal student loan lending for all students.

• Eliminating Graduate Plus loans and limiting Parent Plus loans.

• Phasing out most Income-Driven Repayment (IDR) plans, including Income Contingent Repayment (ICR), Pay As You Earn (PAYE), and Saving on a Valuable Education (SAVE), only leaving borrowers with a modified version of the Income-Based Repayment (IBR) plan.

• Creating a new plan called the Repayment Assistance Plan (RAP), the only income-driven repayment option for new borrowers moving forward.

• Slashing Federal Pell Grant amounts, a much-needed financial aid resource for low-income students.

• Gutting funding for STEM research and higher education institutions.

These changes will result in a massive wave of defaulted student loans, leading to devastating financial consequences and a surge in private student loan lending.

“Lawmakers have chosen to plunge their constituents into economic uncertainty by removing a majority of the remaining protections and programs that exist for Americans with student loan debt,” added SDCC Executive Director Sabrina Calazans. “If this bill is signed into law, students, borrowers, parents, and families will see a direct hit to their pocketbooks and, as a result, there could be a mass wave of defaults.”

We call upon the leaders in Washington to acknowledge and tackle the student debt crisis on behalf of the 45 million Americans and families with student loan debt. There are currently 5 million Americans who have defaulted on their student loans, with an additional 2 million individuals projected to default in July; this is nearly a quarter of the federal student loan portfolio. Canceling student debt and addressing the cost of higher education is necessary and is in the best interest of everyone in this country. Now more than ever, we must stand together to ensure that everyone has the right to accessible, high-quality, and debt-free education.

For more information or to schedule an interview, please contact Natalia Abrams at natalia@studentdebtcrisis.org.

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ABOUT Student Debt Crisis Center

Student Debt Crisis Center is a national advocacy organization with 2,000,000 supporters calling for fundamental reforms to student loan policies and an end to the student debt crisis. Learn more here.