Cutbacks to federal student loan programs are shortsighted

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A major proposal from Republican lawmakers would reshape federal student loan programs, increasing college costs for many and pushing more students toward private lenders, without clear alternative options.

The draft legislation would eliminate subsidized loans, which shield undergraduates from interest while enrolled. Interest would begin accruing immediately, potentially adding thousands to the total costs of attendance. Some income-driven repayment plans, like SAVE (saving on a valuable education) and PAYE (pay as you earn) would end, removing the only federal safeguard that adjusts repayment to earnings.

Additionally, this proposal would end the Graduate PLUS loan program, an option that has long served as a vital funding tool for those pursuing advanced degrees. In the absence of that program, students in law, business and medical programs will need to find private financing, often with higher interest rates or more stringent credit requirements. There would also be a new cap of $50,000 on Parent PLUS loans, which currently have no cap and are widely used by middle-income families.

If passed into law, these changes would take effect on July 1, 2026, and would dramatically reshape how American families and students finance higher education.

House Republicans say the student loan system no longer works — and many on both sides of the aisle agree. Skyrocketing tuition, poor management of loans, high default rates and too many degrees that don't pay off have all played a role in today's student debt crisis.

However, eliminating crucial federal loan programs without creating viable alternatives doesn't fix what's broken. This plan could eviscerate one of the few remaining lifelines students have to pursue advanced degrees without being born into wealth.

Still, these changes could mark a pivotal moment in how we think about higher education finance. The reality is that students are increasingly borrowing large sums to pursue degrees with unclear or even negative return on investment. In recent years, thousands of graduate students have taken out loans to attend programs that offer little economic mobility, with many left underemployed or in debt far beyond their means to repay.

In this context, a shift toward private-market standards could bring a measure of accountability. Should federal lending retreat, private institutions will likely assume a greater role — one grounded in selectivity and data. These lenders tend to evaluate loan eligibility through a lens that includes institutional performance, program outcomes and borrower risk. Such a shift could refocus attention on key considerations that federal aid has often sidestepped: the value of the degree, the program's career readiness and institutional responsibility for student success.

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Private financing can and should support the education ecosystem as a complement to federal aid. Students need funding options that are both accessible and thoughtfully designed to reflect post-graduate earnings and job opportunities. That means underwriting loans based on data, not politics, and designing repayment terms that protect students while ensuring programs deliver value.

The legislation is still in draft form and will undergo committee review, amendments and likely significant negotiation. But this proposal signals a clear shift in Washington's approach to student lending. If this passes, the era of unlimited federal support for graduate school may be coming to a close. This doesn't have to be a crisis. It could be a turning point.

We need to face some difficult realities. Not every degree justifies its cost. Not all graduate programs merit public subsidies. And a uniform federal lending system does not serve all students equally well.

That said, reform must be approached with care. It must be fair, well-designed and supported by real alternatives. Cutting essential programs without first ensuring affordable pathways, whether through tuition oversight, income-based repayment or responsible private lending, risks making the student debt crisis worse rather than solving it.

If Congress truly intends to improve the student loan system, the goal should be better financing options, not simply fewer of them. Scaling back Grad PLUS loans and subsidized borrowing might reduce federal liability. However, it would also leave millions of students and families turning to private lenders without clear guidance or safeguards. That is an enormous burden for a young person preparing for a career in teaching, social work or public service. These are fields that require advanced degrees but offer modest pay.

With higher costs and fewer repayment protections, many students may end up postponing, abandoning or never pursuing graduate education. This could increase dropout rates, lower enrollment in essential but underpaid professions, and worsen workforce shortages in areas that are already struggling to recruit and retain talent. Over time, these effects could undermine key public systems such as health care, education and social services. This would not happen because students lack ambition, but because they lack the means to continue.

We need more doctors, teachers, scientists, and engineers and we must ensure they can afford to get there. The question isn't just who will lend. It's who will lead.