Sponsors (18)
The bill reduces monthly payments and provides targeted cancellation and protections for low‑income borrowers, but it also imposes new limits, administrative complexity, potential payment spikes for those who fail to recertify, and increased costs/exposure to taxpayers.
Borrowers with eligible federal student loans (especially low- and moderate-income borrowers) can cap monthly payments using the SOAR formula with a $0 floor and small‑payment protections, lowering monthly cashflow burdens.
Half of each required monthly payment is applied directly to principal, which accelerates balance reduction for participating borrowers and can shorten time in repayment.
Borrowers who meet the service/time requirements receive automatic loan cancellation after 10 years (undergraduate loans) or after 15 years/180 payments for other eligible loans, reducing long‑term debt for qualifying borrowers.
Borrowers who fail to recertify are removed from the SOAR schedule and placed on a 10‑year standard repayment amount, which can substantially raise monthly payments and increase risk of default.
Expanding ICR eligibility to include dependent‑student PLUS loans and certain consolidations increases federal program exposure and could raise costs for taxpayers while extending long repayment/forgiveness timelines to more loans.
The bill limits new borrowers' future enrollment in PAYE and ICR after two years, restricting repayment flexibility and choices for students entering repayment.
Based on analysis of 2 sections of legislative text.
Adds a new income-contingent repayment plan, expands some ICR loan eligibility, and phases out new enrollment in PAYE and ICR after a two-year transition.
Introduced April 1, 2025 by Jeff Merkley · Last progress April 1, 2025
Creates a new income-contingent federal student loan repayment option and phases out new enrollment in two existing income-driven plans over a two-year transition period. The new plan becomes available 180 days after enactment and is treated as an income-contingent plan with a 25-year maximum repayment period; enrollment rules for PAYE and ICR are restricted after two years, and ICR’s eligible-loan list is expanded to include certain dependent-student PLUS and consolidation loans.