On Student Loans, The “Big, Beautiful Bill” is a Massive, Dangerous Giveaway to the Student Loan Industry.

The bill increases student loan borrowing by $19,000 per undergraduate student…It will cost hundreds of billions.

For years, the student loan industry’s staunchest ally in Congress, Virginia Foxx (R-NC) has been introducing legislation that would make student loans far more expensive, and harmful to the borrowers.

She’s quite famous for launching vicious screeds against student loan borrowers. She has become, essentially, the scribe/attack dog for the lending companies, and for-profit colleges.

To be candid, Foxx has never been well-liked in Congress- including among many republicans. Her bills- while concerning- have never gotten anywhere close to being made into law. In short: Virginia Foxx has built her political nest in the backwaters of the Student Loan Swamp, and has never been taken very seriously.

This year, that all changed.

The GOP’s “Big, Beautiful Bill” - astoundingly- includes nearly all of the language that Virginia Foxx has been pushing over the decades. Because the reconciliation process is “filibuster proof”, it is very likely to become law. The student loan industry’s wish-list is about to become a reality.

The mainstream media are blatantly mis-reporting that this language “tightens lending”, and holds the colleges accountable. This is a bald-faced lie. This bill is a both a giveaway to the colleges (and the Department of Education), and financial rape of students and their parents.

If the Senate allows this language to remain in the Bill, we will see hyperinflation in the nation’s student loan debt, and predatory abuse of the borrowers, the likes of which this country has never before seen.

1. Massively increases loan limits.

The mainstream media is badly misreporting the loan limit provisions, giving the impression that the bill restrains borrowing. It does not.

The bill, in fact greatly increases the borrowing limit for undergraduate students from $31,000 to $50,000. This is absolutely massive. Given that around 6.4 million undergrads borrow for college every year, this provision, alone could increase the undergraduate debt of the incoming class of 2026 (and every class thereafter) by over $120 Billion by the time they matriculate. Other estimates (which assume that two-thirds of undergrads borrow) put this figure as high as $212 Billion in increased debt for the Class of ’26- for a total debt of $560 Billion…a half trillion dollars! And this holds for every graduating class thereafter.

Make no mistake: The colleges absolutely will raise their prices to capture this increased borrowing capacity. We have never before seen an increase in student loan borrowing on this scale in US History.

While the proponents of the bill are touting the elimination of Grad Plus loans for graduate students, they can still borrow unsubsidized Direct Loans, and the loan caps are high ($100,000 , $150,000 for professional grad students). The average Grad Plus borrower today borrows around $65,000 through this program, so very few graduate students will be come up against these caps (and when they do, you can rest assured they will raise the them).

Similarly, the cap on Parent Plus loans ($50,000) is largely meaningless, since the average parent borrows about $32,000- well under the cap. Not to mention: most students have TWO parents…so this limit is doubled for most. Finally, the lifetime borrowing cap of $200,000 will almost never be run up against, or so rarely as to be inconsequential.

Tying lending limits to median colleges prices will also be largely meaningless, since very few students borrow the total amount of school cost. There is almost always other forms of financial aid, familial contributions, non-federal grants, scholarships, etc. that almost always make up the difference between the cost of an expensive school and the median price.

The few students who might be affected will likely take out private loans if the colleges doesn’t create a “fake scholarship” to make up the difference, while schools charging lower than the median will have every incentive- including coercion from the higher prices schools- to increase their prices going forward.

Undergraduates greatly outnumber graduate students, 19 million to 3 million, though. This where the increase in borrowing will be most dramatic. This is a true bonanza for the colleges.

To summarize: This bill will massively increase student loan borrowing, like nothing this country has seen before. The nation’s student debt will easily be $4 Trillion in ten year’s time- possibly much higher-with these increased borrowing limits, compounded interest, and the decreasing repayment rates that we’re seeing today.

2. Ends the President’s authority to broadly cancel student loans.

Few people realize that President Trump cancelled loans broadly by executive order twice during his first term. The bill will end that authority for amounts exceeding $100 million without additional permission from Congress.

This is extremely dangerous legislation. Trump may well want- again- to broadly cancel student loans during his term. This bill would strip the power away from the President who, under existing law, can cancel loans without needing to draw anything from the Treasury or add anything to the national debt. Because of “paygo” rules, giving this power to Congress would mean that new tax money would have to be raised from the Taxpayers in order to cancel student loans. This is massively expensive, unnecessary, and absurd, given that the federal government already owns these loans, and paid for them many years ago when the loans were originally made.

Trump should tell the Senate to remove this dangerous language. The Congress of 1965 gave the President/Secretary very broad authority to cancel loans, and for good reason.

The federal portfolio is already in catastrophic failure, and is now growing exponentially, where more than $2 Trillion will be added in interest and new loans over the next ten years. This cannot be allowed to continue and President Trump knows this full well. He should want to retain this power that the 1965 Congress afforded him.

That power should not be usurped by today’s Congress…particularly people like Virginia Foxx, who fight only for the lender interests, and squarely against those of the borrowers.

3. Allows defaulted loans to be rehabilitated twice.

Student loan rehabilitation is process where a defaulted borrower pays for ten months, and then signs for a new, much larger loan- typically twice the value of the loan when it defaulted. This generates a 16% taxpayer-paid commission for the student loan industry. These loans default again around 80% of the time.

Imagine a borrower who defaults at $50,000, and signs for a $100,000 “rehabilitated” loan (which triggers a $16,000, taxpayer-funded paycheck for the industry). There is an 80% chance this borrowers will default again and if they are coerced into rehabilitating again, they’ll sign again for a new, twice-rehabilitated loan of something like $200,000, which will result in another, much larger,$32,000 taxpayer-funded commission for the student loan companies. This is around $50,000 in collection charges the industry makes, and the borrower is virtually certain to default a third time. This is hugely costly for the government, and financially ruinous for the borrower, who will never repay this debt. The only winners- big winners- here, are the student loan companies who will have an even greater incentive than they already have to push loans into default.

The mainstream media (which is aligned with the student loan industry in many cases) isn’t giving much coverage to this provision, and in some cases, is even talking about it like it’s one of the “good” parts of the bill.

This provision, alone is guaranteed to cause financial ruin for millions of borrowers, and cost the taxpayers billions in payments to the student loan industry that will never be recouped.

4. Gives away $1 Billion to the Dept of Education and Servicers.

You also don’t see this in the mainstream media. One would think that administrative costs for the Department of Education would have come way down in the wake off all the playoffs we’ve been hearing about. NOT SO.

In fact, the “Big, Beautiful Bill” gives the Department of Education $1 Billion in additional funding for administering the loan program (which the Small Business Administration is now, supposedly, administering). This is another shameless giveaway of taxpayer money to the Student Loan Swamp. In view of the largest contracts the Department has let in recent years, it is safe to assume that this money will be largely funneled to the student loan industry.

President Trump and the Republicans have shamefully broken their very public commitment to “eliminate” the Department of Education with this provision.

5. Eliminates subsidized loans.

This flies in the face of the original intent of the Higher Education Act, where President LBJ declared, upon signing the HEA, that the loans would be “free of interest”.

The Department of Education already accrues around $110 Billion in interest on its loan portfolio. Donald Trump himself, has decried the fact that this loan program is being used as a revenue generator for the federal government.

6. Eliminates, replaces IDR plans. Repeals Borrower Defense to Repayment.

The bill will end and replace The ICR, PAYE, REPAYE repayment plans with a much more expensive, 30-year plan which will take 15% of a borrowers earnings for 30 years. The bill also repeals the Borrower Defense to Repayment (BDR) process, where borrowers student loans can be cancelled where the school committed fraud.

Most people pay around 15% of their income in federal taxes every year. This repayment plan, essentially, is a doubling of their taxes for nearly the entirety of their adult earning years. All because they went to colleges for four years. Think about that.

Of course, ALL of the existing Income-Driven Repayment plans are (and will be) cruel jokes in the first place- where the large majority of borrowers are disqualified out of the programs in the first place. This has been true for decades, and will surely continue under the new repayment plan to be added onto to the scrapheap.

7. The risk-sharing provision is fake, meaningless.

The bill touts a risk-sharing element which requires the colleges to re-imburse the government 10% of outstanding loan balances if too many students fail to repay their loans.

This is meaningless to the colleges. They know it won’t be enforced.

This is very much like the “Gainful Employment Rule, which penalized colleges for bad student outcomes, which never worked, was never enforced and ultimately was simply abandoned by the Department of Education, which never meaningfully enforces such provisions.

The colleges know this full, well. It is obvious that they love this bill, and are more than happy to let this language through.

Wink, Wink.

This language simply cannot be allowed to become law, and I suspect even the Republicans on the Hill know this. Their states are already wrecked by this unconstitutional, predatory loan scam.

This language will cause a more-than-doubling of their state’s federal student loan debt in ten years time- debt that simply cannot and will not be repaid. (Two-thirds of borrowers aren’t making payments today, after all).

Virginia Foxx’s state of North Carolina, for example, has more taken from it every year by the Department of Education in interest, alone, on federal student loans than the top 5 agricultural exports of the state combined.

People are already both killing themselves, and killing others as a result of this unconstitutional, lifelong debt. If Trump and Congress want to see much more of this, they will allow this poisonous language to remain in the bill.

The Republicans know FULL WELL that the federal loan program is in catastrophic failure. They know FULL WELL that constitutional bankruptcy rights must be returned to the debt, and the entire program cannot be allowed to continue, much less strengthened and allowed to grow.

The Republicans could return bankruptcy rights tomorrow, and make the colleges- particularly the obscenely wealthy schools- responsible to reimburse the taxpayers for discharges. Republicans John Cornyn and Josh Hawley sponsored a similar bill in 2022 before it was killed by the Democrats.

The growth the Big, Beautiful Bill will cause in our national debt, alone, should be more-than-sufficient grounds for President Trump and Senate Republicans to stop this madness, put the kibash on this nationally threatening language, and put Virginia Foxx back on her lily pad in the Student Loan Swamp.

The only question: Will they?