GOP budget would raise student loan payments to pay for tax cuts for wealthy | Opinion

For many Kentuckians, student loans aren’t just a monthly bill — they’re a long-term burden that shapes decisions about work, family, and homeownership. Now, Congressional Republicans are rushing through legislation that would make that burden even heavier.

While much of the attention around President Trump’s “Big Beautiful Bill” has rightly been focused on cuts to Medicaid and SNAP, the bill also overhauls federal student loan repayment — and it’s a raw deal for borrowers in the Commonwealth.

To pay for tax cuts for millionaires and billionaires, the bill slashes billions from the student loan program. At the center of these cuts is the Repayment Assistance Plan, or RAP, a reworked version of income-driven repayment (IDR), which has provided relief for decades by tying payments to income.

In 2023, the Biden Administration created a more generous plan: Saving on a Valuable Education (SAVE) plan. Before SAVE, most IDR borrowers paid 10% of their discretionary income—income above 150% of the federal poverty line—with balances forgiven after 20 or 25 years.

As a presidential appointee in the Department of Education, I helped write the regulations that created SAVE to fix a broken system. SAVE was the most affordable repayment plan yet, lowering payments for the vast majority of borrowers, particularly for the lowest income borrowers.

SAVE cut payments on undergraduate loans to just 5% of discretionary income, and it increased the discretionary income threshold to 225% of the federal poverty line so borrowers could better afford necessities like housing and groceries. It also provided earlier forgiveness for low-balance borrowers. SAVE also forgave small balances sooner—so a community college who borrowed $10,000 but never earned enough wouldn’t be trapped in repayment for decades.

But Republicans are rolling many of those protections. Under RAP, no income is protected for necessities and borrowers must pay 1% of income for every $10,000 earned, up to 10%.

Under SAVE, someone earning $30,000 would pay $0 per month. Under RAP, they’d owe $50. At $60,000, payments jump from $121 under SAVE to $250 under RAP. And forgiveness wouldn’t come until after 30 years—5 to 10 years longer than current plans—leaving some still in repayment when their kids start college.

RAP hits the lowest-income borrowers the hardest by imposing a $10 minimum monthly payment, a major shift from current plans. Today’s lowest-income borrowers qualify for $0 payments. They’re also most at risk of default. Removing the $0 option makes it harder to keep them current, which carries serious consequences for their finances.

The bill doesn’t stop there. It also revives a tax penalty on loan forgiveness. Right now, borrowers who receive IDR forgiveness don’t have to pay taxes on the forgiven amount. But that protection expires December 31, and the bill doesn’t extend it.

That means Kentuckians whose loans are forgiven could face surprise tax bills. With the average amount forgiven around $40,000, someone earning just $30,000 could owe an additional $7,000 or more in federal taxes. Imagine making payments for two decades, finally getting relief—and then getting hit with a massive tax bill. That’s not just bad policy—it’s deeply unfair, especially for someone who never saw the earnings boost a degree was supposed to bring.

These changes—and the bill’s other cuts—aren’t about fiscal responsibility. They’re about paying for billions in tax breaks for the wealthiest Americans, on the backs of working families.

Kentuckians—especially those in public service, health care, or education—deserve a repayment system that reflects their contributions and circumstances. Education should be a ladder to opportunity—not a trap door to lifelong debt.

Wesley Whistle is a PhD candidate in higher education at the University of Kentucky and a former presidential appointee at the U.S. Department of Education.