Summary of the House Committee on Education and the Workforce Student Success and Taxpayer Savings Plan

(Committee Print to comply with reconciliation directives included in H. Con. Res. 14 Section 2001(b)(3), H. Res. 344)

This analysis was prepared by Venable, LLP on behalf of AACOM.

On April 28, the House Committee on Education and the Workforce (Ed and Workforce or the Committee) released the text of the Student Success and Taxpayer Savings Plan. This bill complies with reconciliation directives included in H. Con. Res. 14 Section 2001(b)(3), the Republicans’ budget resolution, and contains the Committee’s recommendations for changes in laws within their jurisdiction. The Committee marked up and ordered reported the Student Success and Taxpayer Savings Plan on April 29 with  no amendments other than amendment in the nature of a substitute making a technical change. The bill will now be submitted to the House Committee on the Budget (Budget Committee).

Once the Budget Committee receives all the House committees’ recommendations, it will report a reconciliation bill to the House. Upon passage by the House, the reconciliation bill will be sent to the Senate, and the Senate committees, including the Committee on Health, Education, Labor and Pensions, will hold markups on their respective bills. Like the House process, the Senate Committee on the Budget will receive all the Senate committees’ recommendations and report a reconciliation bill to the Senate for passage subject to a simple majority vote. If the Senate-passed reconciliation bill is not identical to the one sent over by the House (which is likely), the House must either pass that identical bill or begin the process of resolving differences through a formal House-Senate conference or otherwise. Both chambers must pass an identical bill before it can be sent to the White House. 

Ed and Workforce was instructed by the budget resolution to find $330 billion in spending cuts over the next 10 years. The following is a summary of the provisions impacting institutions of higher education (IHEs), with a focus on colleges of osteopathic medicine, in the Student Success and Taxpayer Savings Plan. 

Risk Sharing and Institution Accountability 

Financial Penalties

The bill includes the risk-sharing proposal from the College Cost Reduction Act from the 118th Congress. At a high level, a metric called the Earnings-Price Ratio (EPR) is used to either financially reward an institution (via the new PROMISE Grant program) or hold it financially responsible (via risk-sharing payments) for the government’s losses on federal loans borrowed by that institution’s students. The portion of government losses the institution will be responsible for is based on the tuition charged relative to graduates’ increase in earnings. 

More specifically, institutions are required to co-sign loans they expect their students to take out and, as co-singers, be responsible for a portion of any taxpayer losses if those loans go unpaid. To determine an institution’s financial liability, the bill instructs the Department of Education to establish student cohorts based on whether students graduated from a particular program or otherwise ceased enrollment and calculate a risk-sharing percentage, which represents the percentage of loan losses the school is responsible for should those loans go unpaid or require taxpayer assistance through a safety net, like income-driven repayment. For non-completers, the risk-sharing percentage is based on the institution’s or program’s completion rate. For completer cohorts, the risk-sharing percentage is based on the EPR. The EPR is calculated for each educational program by subtracting one from the quotient of median “value-added earnings” (i.e., a graduate’s earnings increase) of students who completed such program in the most recent award year for which earnings data is available divided by the median total price the institution charges students in the cohort for the program. 

EPR = (Median Value-Added Earnings / Total Price) – 1

A negative value indicates the program’s price exceeds the earnings increase graduates received. A positive value is intended to indicate that graduates earn enough to recoup the costs of attendance. 

For example, if the median value-added earnings for a cohort of students is $96,000 after graduating from a program costing a total of $100,000, the EPR would be –0.04. This would mean the institution is responsible for 4 percent of the government’s losses each year the cohort of borrowers remains in repayment. A school with a positive number would not owe anything under the formula and would instead be eligible for a PROMISE Grant of up to $5,000 per federal student aid recipient annually. 

Value-added earnings are defined as the annual earnings of each student in a cohort measured during the applicable earnings measurement period for the program minus 150 percent of the poverty line (for undergraduate credentials) or 300 percent (for graduate or professional credentials). The value-added earnings for students are measured (i) one year after the student completes the program for undergraduate, post baccalaureate, or graduate certificates; (ii) two years after completion for associate or master’s degrees; and (iii) four years after completion for bachelor’s, doctoral, or professional degrees. The Secretary also has the authority to extend an earnings measurement period for a program of study that (i) requires completion of an additional educational program to obtain a license, and (ii) when combined with the program length of the additional program required for licensure, has a total program length that exceeds the relevant earnings measurement period, up to a maximum of one year after the student completes the additional program of study. 

The government’s losses portion of the formula are equal to the sum, in each year the cohort remains in repayment, of (i) any missed or partial payments; (ii) the total amount of interest waived, paid, or otherwise not charged by the Secretary of Education under an income-based or income-driven repayment plan; and (iii) any amounts forgiven, discharged, cancelled, waived, or otherwise reduced by the Secretary. Loans in a medical or dental internship or residency forbearance, graduate fellowship deferment, rehabilitation training program deferment, in-school deferment, cancer deferment, military service deferment, or post-active-duty student deferment, are not considered when determining the government’s losses.

Plain Analysis 

By default, earnings for DO graduates won’t be measured until four years after graduation from the DO program. The Secretary has discretion to extend that period if an additional education program is required for state licensure and the additional program will take longer than four years after graduation from the DO program. In that case, the new earnings measurement period would be delayed to no later than 1 year after the additional program is completed. So, for example, if an additional five-year program is required for state licensure, earnings measurements would start no later than year 6 years after graduation from the initial DO program (or one year after the subsequent additional program concludes). 

For doctoral students, earnings data won’t be measured any earlier than four years after graduation from the doctoral program. If a medical school graduate is required to do a six-year residency for state licensure, the Secretary can extend the earnings measurement period so that it does not begin until after the residency is complete, but in no event would the earnings measurement period begin more than one year after the 6-year residency ends. If the medical school graduate only does a one-year internship after graduation, the earnings measurement period would begin four years after graduation from the medical program, or three years after the internship ends.

Changes to Title IV Programs

Borrowing Limits 

The bill changes how annual borrowing caps are set and adjusts aggregate caps for undergraduate, graduate, and professional students under title IV of the Higher Education Act (title IV). 

Under current law, graduate or professional students may annually borrow up to $20,500 in federal unsubsidized Stafford loans and up to the cost of attendance via the grad PLUS loan program. The lifetime maximum a graduate or professional student can borrow in the Stafford loan program is $138,500, which includes all federal loans received for undergraduate study, too. 

Under the bill, borrowers are permitted to borrow up to the median cost of college (MCOC) of the program of study in which the student is enrolled. Regarding lifetime borrowing limits, undergraduate borrowing are capped at $50,000, and graduate and professional (e.g., medical degree programs) borrowing are capped at $100,000 and $150,000, respectively. Beginning on July 1, 2026, $200,000 is the maximum any student, or parent on behalf of a student, will be able to borrow under the federal loan program. 

Sunset of Grad PLUS Loan Program

The bill includes provisions that eliminate grad PLUS loans, which are offered to students enrolled in graduate or professional programs. Graduate students can currently borrow from the grad PLUS loan program to fill the gap if the cost of attendance for their program exceeds the applicable existing federal Stafford loan borrowing caps. The bill sunsets eligibility for the program for any period of instruction beginning on or after July 1, 2026, but allows current students to access grad PLUS loans until they complete their program of study or three years after enactment, whichever is less.  

Restriction of Parent PLUS Loan Program

The bill includes provisions that restrict parent PLUS loans, which are offered to parents of dependent undergraduate students.  The bill sunsets eligibility for the program for any period of instruction beginning on or after July 1, 2026, unless the dependent student borrows the maximum annual amount of federal unsubsidized Stafford loans in the academic year and the maximum annual amount is less than the cost of attendance of the program of study for that dependent student.  The bill establishes an aggregate limit for parent PLUS loans of $50,000. Under the bill, student borrowers have access to two loan types (unsubsidized and subsidized).

Student Eligibility and Determination of Need 

The bill amends the eligibility criteria for federal student aid under title IV to require a student to be a citizen or national of the United States or an alien lawfully admitted for permanent residence under the Immigration and Nationality Act (INA). Certain nationals of Cuba, certain nationals of Ukraine or Afghanistan, and individuals that are part of a Compact of Free Association are also eligible. Additionally, lawful family-sponsored immigrants, those that otherwise meet all eligibility requirements for an immigrant visa except that one is not immediately available, and those not otherwise ineligible for visas or admission to the US. This eligibility takes effect July 1, 2025, and applies beginning with the 2025–2026 award year and for each subsequent award year.

The bill also caps the total amount of federal student aid a student can receive annually under title IV at the “median cost of college,” which is defined as the median cost of attendance for students enrolled in the same program of study nationally and calculated by the Secretary using data from the previous award year. This provision takes effect on July 1, 2026.

Finally, the bill restores exemptions of family farms (on which the family resides) and small businesses owned and controlled by the family under the Free Application for Federal Student Aid. These exemptions are restored on July 1, 2026. 

Federal Loan Repayment

Changes to Repayment Options

For federal student loans disbursed on or after July 1, 2026, there will be two repayment options for borrowers.

• Standard repayment plan. The standard repayment plan will have a fixed monthly repayment amount for a period ranging from 10 to 25 years based on the amount borrowed.  A borrower with a total outstanding principal loan amount of less than $25,000 would repay for 10 years. Those with $25,000 to $50,000 for 15 years; $50,00 to $100,00 for no more than 20 years; and more than $100,000 for no longer than 30 years.
• Repayment Assistance Plan. The bill establishes a new income-driven repayment plan with monthly repayment amounts that range from 1 to 10 percent of a borrower’s total adjusted gross income, depending on the borrower’s income. There is a $10 minimum monthly payment. Also, qualified borrowers making required on-time payments will have any unpaid interest waived (should the monthly payment not cover the accrued interest). by their principal payment matched up to $50 (should the monthly payment reduce the outstanding loan less than $50). This plan includes a maximum repayment term equal to 360 qualifying payments, including previous payments from income-contingent, income-based, and other qualifying existing plans.

Repayment Assistance Plan payments count towards Public Service Loan Forgiveness (PSLF), however payments made by borrowers serving in a medical/dental residency on or after July 1, 2025 are excluded. Discretionary forbearance is limited to nine months during a 24-month period for loans disbursed after July 1, 2025, and the bill allows for zero interest on medical/dental residency deferments for up to 4 years. Loans disbursed on or after July 1, 2025 will not have economic hardship and unemployment deferments. 

The bill maintains all current repayment options for borrowers with existing loans disbursed prior to July 1, 2026, except for borrowers on an income-contingent repayment plan. All income-contingent repayment plans are terminated and the authority to provide them is repealed, and the Secretary is required to transfer borrowers in repayment status or administrative forbearance under those income-contingent plans to the new statutorily authorized income-based repayment plan. Borrowers with existing and new defaulted loans will be allowed to rehabilitate their loans twice, instead of once, to help transition into repayment. 

The bill restricts the Secretary’s ability to issue or modify regulations or guidance with respect to the income-based repayment plans, waives negotiated rulemaking requirements for transitioning borrowers to income-based repayment, and modifying the terms of the loan repayment plans.

Additionally, the bill provides $500 million of mandatory funds in each of the fiscal years 2025 and 2026 to the Secretary for costs associated with returning borrowers back into repayment on their loans and to help with the costs of building the new repayment plan. 

Regulatory Relief

Eliminates 90/10 Rule

The bill repeals the 90/10 rule, which prohibits proprietary IHEs from receiving more than 90 percent of their revenue from federal student aid funding. 

Eliminates Gainful Employment Rule

The bill repeals the Gainful Employment rule, which terminates proprietary and vocational programs’ participation in the federal student aid programs if the programs graduates consistently fail debt to income metrics. 

Other Repeals

The bill repeals Biden-era rules for closed school discharges and borrower defense to repayment and prohibits the Secretary of Education from implementing any rule, regulation, policy, or executive action unless explicitly provided in an Act of Congress.

Limitations on Executive Authority

The bill requires the Secretary of Education to determine whether any new federal student aid regulation would result in an increased cost to the federal government. The Secretary may not issue a proposed rule, final regulation, or executive action that is economically significant and would result in an increased cost to the federal government. 

Economically significant means that the draft, proposed, or final regulation or executive action, means that the regulation or executive action is likely, as determined by the Secretary, to have an annual effect on the economy of $100 million or more or adversely impact the economy, a sector of the economy, productivity, competition, jobs, environment, public health, safety, state, local, or tribal governments or communities.