While President Joe Biden has cleared millions' student loan debt during his presidency, Congress could now approve a law that would increase student loan payments for a large number of borrowers.
The College Cost Reduction Act is predicted to reduce the government deficit by $250 to $280 billion over a decade, according to the Committee for a Responsible Federal Budget.
Specifically, Congress could save $155 billion from the law's changes to Pell grants and student loans and $127 billion from repealing and replacing Biden's SAVE income-driven repayment plan, which is currently facing legal challenges.
North Carolina Republican Representative Virginia Foxx introduced the bill this year. If implemented, it would require borrowers to pay back what they owe on a 10-year standard payment and double the Pell grant award for juniors and seniors at college on track to graduate.
"The positive aspect for these students is that Pell grant funding would increase," Michael Lux, an attorney and founder of the Student Loan Sherpa, told Newsweek. "Additionally, the goal of the act is to lower college costs, and to the extent that colleges lower prices, it could help some families. However, the act comes with a considerable downside."
The bill would also eliminate PLUS loans for graduate students and the Federal Supplemental Educational Opportunity Grant program, causing some concern over how it would actually end up impacting college affordability.
There'd also be strict borrowing caps for students taking out loans. For undergraduates, the amount would be limited to $50,000, while graduate students would see a $100,000 maximum borrowing amount.
"The borrowing caps could greatly restrict access to federal loans for students in expensive professional programs like law or medicine," Michael Ryan, a finance expert and the founder of michaelryanmoney.com, told Newsweek. "Interestingly, high-income graduate borrowers might benefit from the capped total payments compared to existing income-driven repayment plans."
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, said ultimately the law could hurt low-income students who already struggle to afford college in the long run.
"The act would in some situations double the amount of assistance low income students could receive in their final two years of undergraduate study through the pell grant system, which sounds great in theory," Beene told Newsweek.
"However, the proposal also looks to make universities take more responsibility for unpaid loans, and that could lead to college costs rising to create a financial cushion for that increased liability. At the end of the day, it's difficult to see outside of additional Pell grant assistance how this really saves incoming students on the price of an education."
Jessica Thompson, Senior Vice President at The Institute for College Access & Success (TICAS), called the bill a "misguided approach" to increasing college access and lowering costs.
"The reality is, the College Cost Reduction Act would increase financial burdens and risks for students and borrowers," Jessica Thompson told Newsweek. "We conducted rigorous analysis on the bill and found that it would increase monthly student loan payments for most borrowers. It could also leave some borrowers indebted indefinitely, as well as increase delinquency and default rates."
Newsweek reached out to Foxx for comment via email.
Now that Trump is reentering the White House and Republicans won the House, passing the bill could become even more likely, said Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group.
"I do believe the new administration would be looking to cut costs anywhere possible, and if this is a net benefit for the incoming administration, I would foresee this being passed," Kevin Thompson told Newsweek.
Those in favor of the College Cost Reduction Act say it would force colleges to lower prices by getting rid of PLUS loans for parents and graduate students, but not everyone is certain.
"The problem for many current and potential students is that without the help of PLUS loans, they can't attend school," Lux said. "Fewer students who can attend school might push prices down, but it only helps those who can afford to pay out of pocket or qualify for private financing."
Due to the divided political climate in Congress, substantial revisions might be necessary in order for the bill to gain wider support, Ryan said.
"Republicans are generally supportive of its accountability and cost-control measures while Democrats are concerned about potential negative impacts on low-income students," Ryan said.
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