A new proposal making waves in Washington, D.C. is aiming to shake up the landscape of higher education financing in the United States. The College Cost Reduction Act (CCRA), introduced in early 2024 by House Education and Workforce Committee Chair Rep. Virginia Foxx (R-NC), promises sweeping changes to student loan repayment systems, institutional accountability, and federal aid programs.
While supporters say the bill would simplify repayment and make colleges more responsible for student outcomes, critics warn that it could increase the financial burden on borrowers and limit access to higher education for low-income families.
Here’s a closer look at what the bill proposes and how it could affect student loan payments for millions of Americans.
A New Approach to Student Loan Repayment
At the heart of the CCRA is an overhaul of the existing Income-Driven Repayment (IDR) system. Currently, borrowers can choose from several IDR plans, such as REPAYE or the new Saving on a Valuable Education (SAVE) plan, which caps monthly payments at 5% of discretionary income above 225% of the poverty line.
Under the CCRA, those options would be replaced with a single “repayment assistance plan.” In this new framework, borrowers would pay 10% of their discretionary income above 150% of the federal poverty level. This change effectively raises the floor for payment obligations while lowering the income protection threshold—potentially leading to higher monthly payments for many.
Forgiveness under this new plan would only be granted after the borrower repays the full amount they would have under a 10-year standard repayment plan—a marked departure from current IDR plans that offer forgiveness after 20 or 25 years regardless of how much the borrower has paid.
Critics argue this would delay forgiveness for lower-income borrowers and make student loans harder to manage during financial hardship.
“The CCRA would significantly raise payments for many borrowers and eliminate protections that help people avoid default during tough times,” said a report by The Urban Institute.
Phasing Out Key Federal Loan Programs
Another major provision in the bill is the elimination of federal PLUS loans, which are available to graduate students and parents of undergraduates. These loans have long filled the gap between federal aid limits and actual college costs.
By scrapping PLUS loans, the CCRA could force students and parents to turn to private lenders, which often have stricter terms and fewer consumer protections. That move has raised red flags among borrower advocacy groups.
According to The Institute for College Access & Success (TICAS), removing access to PLUS loans could “make higher education riskier and less accessible for low-income and middle-income families.”
Good News: Cutting Fees and Expanding Pell Grants
Not all changes in the CCRA are controversial. The bill includes two borrower-friendly reforms:
- Eliminating origination fees on federal loans, which are currently deducted from the disbursed amount and effectively increase borrowing costs.
- Stopping interest capitalization, a process that adds unpaid interest to the loan principal, compounding debt for those in deferment or forbearance.
Additionally, the bill would expand Pell Grants—doubling the maximum award for juniors and seniors who meet certain academic requirements. For low-income students who rely on these grants, this could provide meaningful relief.
You can check current Pell Grant eligibility and maximum award details via the Federal Student Aid website.
Making Colleges More Accountable
In a move to hold higher education institutions more accountable, the CCRA would introduce annual risk-sharing payments for colleges. These payments would be based on the amount of student debt that goes unpaid by each graduating cohort.
The goal is to incentivize schools to ensure their students graduate and succeed in the job market. Critics worry, however, that these provisions might discourage colleges from accepting at-risk students.
Political Divide and the Road Ahead
The CCRA has found support among Republicans, who argue the reforms will make the system more sustainable and reduce federal costs. However, Democrats and several education groups argue the bill tilts the system too far in favor of lenders and institutions while penalizing borrowers.
With the House of Representatives under Republican control, the bill passed through committee but faces an uncertain future in the Senate, where Democrats hold a slim majority.
If passed, the College Cost Reduction Act could reshape how millions of Americans finance their college education. For now, student loan borrowers and policymakers alike are watching closely.
What Borrowers Should Know?
- You can view current IDR plans and compare them to the proposed changes at the Federal Student Aid official site.
- For updates on the legislation, visit congress.gov to track H.R. 6951—the formal name for the College Cost Reduction Act.
- If you’re repaying student loans, consider speaking with your loan servicer about how the proposed changes may impact you in the future.
Conclusion
The College Cost Reduction Act could bring a fundamental shift to federal student loans, offering some benefits but also raising serious concerns. As lawmakers debate its merits, borrowers must stay informed to prepare for what could be the biggest transformation in student lending in over a decade.
