How will the reconciliation bill affect student loans?
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Hey, everybody. I'm Rima Jerez. Welcome back to Make Me Smart, where we make today make sense. And I'm Kimberly Adams. Thanks, everyone, for joining us. It's Monday, June 16th. As we mentioned last week, this week is going to be all about the reconciliation bill, also known as the one big, beautiful reconciliation.

Bill Act, and it is so big that we thought it required more of a deep dive. Now, yes, the bill is mostly about extending the 2017 tax cuts, but there's so much other stuff in it that's worth your attention and figuring out whether or not you care enough about it to talk to your member of Congress. So each day this week, we're going to break down one part of the bill and answer questions from you, our listeners along the way.

Yes. And just to back up, I feel like reconciliation is one of those DC things that experts and reporters talk about, like everyone knows what it means. And I know we've y'all have talked about it a bunch on the show, but there's just so much info to keep in our heads these days. So just as a refresher, reconciliation bill, it is a special type of budget legislation that can pass with a simple majority and can't be filibustered. So

Republican leaders are pushing the bill through Congress using a powerful tool that allows them to enact the legislation without a single Democratic vote. The process is called budget reconciliation, and it's been used by both parties for a very long time. So why don't we start off by getting a sense of where this massive piece of legislation stands? How would you describe the status of the bill right now, Kimberly? Okay.

So the House did pass its version of this reconciliation bill back in late May. And so now the Senate is working its way through it. And each committee is looking at different sections of the bill and kind of revising it, seeing what they like, what they don't like. And they're also checking the legislation for anything that doesn't stand up to what's called the Byrd rule, which is named after a senator from West Virginia who put

these kind of conditions in to make sure that things met the rules of reconciliation. This has to do with that you can only put stuff in a reconciliation package that directly impacts the budget, and it can't just be something where you attach a dollar amount to it and say, oh, therefore it affects the budget. It has to really be related to things like that. There are a couple of other rules, but the various committees are going through looking at what each...

provision says what kind of feedback they're getting from the lobbyists, their constituents, and whether or not things line up to the Byrd rule. And so, for example, last week, the Senate Agriculture Committee came out with suggested changes to what the House wanted to do in the reconciliation package related to the SNAP program. It's a food assistance program.

The House wants to put some pretty stringent work requirements in order to get access to SNAP benefits. And the Senate is like, sure, let's add these work requirements, but let's make them a little bit less severe in our version. Now, where do things go from here? President Trump says he wants this bill, all of it.

passed by the 4th of July. Oh, that's coming up. Oh, no. Yeah, in order to hit that deadline, the Senate has to make all the changes it wants to, send those back to the House. The House and the Senate then have to meet together. Well, I should say Republicans in the House and Senate because this is their only doing with Republicans, have to meet together to decide, you know, whose changes win out and what they're actually going to vote on. It's going to be real tough to pull off by the 4th of July. Yeah, dude, that's like, what, in two weeks? Yeah.

We'll see what happens. And like you said, it's huge. I mean, there's more than a thousand pages in this thing. We'll talk more about it this week. And some of the main headlines y'all may have seen are how it'll extend tax cuts with the biggest savings going to the wealthy, how it would push more money to immigration enforcement and the military. Well,

Pairing back things like health, nutrition, education, and clean energy programs to make up for those costs. But right now we're going to focus on some questions that we heard from you all. We got a question about the Byrd Rule and what it could mean for the future of the bill. John in Rochester wrote us this question. He said, if any item is removed from the bill by the Byrd Rule, does that force the bill to be negotiated and re-voted by either the House or both the House and the Senate?

This is such a complicated thing, the bird rule. So...

There is a person working in the Senate who's known as the Senate parliamentarian, and they're supposed to be kind of the referee about whether or not something adheres to the bird rule. Now, sometimes senators will look at something and they'll be like, OK, this obviously isn't going to make it through what they call the bird bath. So they just take it out anyway. But sometimes if they really want to try and push it, they'll wait for the Senate parliamentarian to weigh in. And usually what

When the Senate parliamentarian says, no, this is ineligible, this violates the Byrd rule, they will drop it from the legislation. And that doesn't stop the Senate from considering the rest of the reconciliation package. They'll just drop that one provision. Now then, there are some experts, particularly on the progressive side. Notably, there's a guy at the Center for American Progress who's been really –

raising the alarm on this, there are some experts who think that Republicans actually plan to ignore some provisions of the Byrd rule in this bill because they don't actually have to do what the Senate parliamentarian says. There's ways around it. And we just saw that with this, um,

EPA waiver where the California has its own EV standards and the Senate parliamentarian said that they couldn't overturn this waiver with the Congressional Review Act and the Republicans were like, we

we hear you, but we're going to do it anyway. And so there are some people who are deeply concerned that the Republicans may ignore provisions of the Byrd bill and just push things through anyway. But nevertheless, usually what the Senate parliamentarian says about the Byrd rule is what they stick with. And there are several provisions in this legislation that people think will not make it through from the House version to the Senate version. For example, that 10-year moratorium on state and local

Right.

But it's not clear if even those changes would make that particular provision any more compliant with the bird rule. So we'll see what they do on that. Yeah, it's so funny. This is more of a digression, but I've been spending the last several weeks making a bird bath. And so every time this morning, I finished it finally. And this morning I was sitting on the front porch and I was like trying to enjoy this bird bath. And all I could think about was Senator Robert Byrd. And I was like, wow, thanks. Thanks, Congressman.

And we should say that he spells his, or he did, spell his name with a Y as opposed to an I. It's B-Y-R-D. Yeah. Yeah. Anyway, one of those funny things. Yeah. Now that we've gotten a bit of a refresher about how the reconciliation process works and where the bill stands, let's get into some of what's actually in the bill. Our producer, Courtney Bergseeker, had a question about what the bill could mean for the future of federal student loans. Let's hear it.

Hey, Kimberly and Rima. I'm one of the over 7 million student loan borrowers enrolled in Biden's SAVE program. So here's my question. What's going to happen to my student loans?

What's going to happen? Does anyone know yet? I'm not sure. But the Senate unveiled their version of the higher education part of the reconciliation bill last week. And so they did make some changes to the House bill. But most of the provisions the House passed around student loans are still intact. And so far, things are not looking great for many borrowers like these changes. They would be very significant reforms to our financial aid system.

So just to back up, currently borrowers have about like a dozen plan options to repay their debt. But under the Senate Republican proposal, it would get rid of most of those, including Biden's SAVE program. And there would be just two repayment plan choices. So the first would be a kind of standard plan where the payments are fixed, which would result in higher monthly payments for many people.

And the second one is what's called the repayment assistant plan or RAP. So these are monthly bills for borrowers. So rather monthly bills for borrowers on this plan, it would depend on how much money you make. So the payments would typically range from like one to 10% of someone's income. The more you earn, the more you're required to pay. But unlike old income plans that offer forgiveness after 20 or 25 years, this new one wouldn't wipe out your debt until 30 years. So

So this plan would increase payments for the lowest income borrowers. And at the same time, it does include some new perks like there is an interest subsidy, which just means the government would cover part of the interest if your monthly payments aren't enough to keep up with it. So you wouldn't watch your balance grow bigger, even though you're paying every month. So that is the gist of it. So I wonder...

how much they've been hearing from people about all these different provisions. Like, are students writing into them? Is that what's influencing the change? Is it the student loan servicers? Like, who are the big players in all of this, I wonder? Yeah. I mean, it's so hard to keep up with everything that I imagine it's hard for students to know what's going to affect them and when those provisions would even go into effect for them specifically, right? Yeah. Yeah.

All right. Moving on to another question about how the reconciliation bill could affect access to higher education. This is one from Matt in Raleigh, North Carolina.

It seems like they are dropping the amount of money awarded to Pell Grant recipients and also increasing the amount of hours that you need to take to receive the funding. This is going to be very difficult, in my opinion, for students that are already having to work hard to attend college. I was hoping for your thoughts. Thanks for making us all smarter.

Hmm. Yeah, there's been a lot of confusion about what's happening with the Pell Grant. So currently, here are where things stand. The TLDR is that the Senate walked back some of the House's more extreme provisions related to the Pell Grant program. So under the House's proposal, the amount of coursework required to receive a maximum Pell Grant amounted.

It would have increased from 12 to 15 credits per semester. So that might sound small, but for students balancing work and caregiving or health issues, those extra hours can be a real barrier. And it would have completely cut off grant access for students enrolled in fewer than seven and a half credit hours.

So this would have cut off access to thousands of part-time students and limited the amount of money many students would receive. But the good news for students is that the Senate, for now, has walked back those changes. So the Senate's version of the bill does not make any changes to traditional Pell Grant eligibility.

But I feel like there's so much whiplash. I'm like, but Trump's latest budget proposal aims to make cuts to Pell Grant funding that would drastically lower the maximum Pell Grant amount, meaning that even students who qualify for the full amount would get less money to work with. So in the end, changes to the Pell Grant could be coming in the future.

Yeah. So I think that's an important point about the whiplash, because the House wants one thing, the Senate wants another. The Senate wants sort of a milder version of what the House wants and would kind of –

stop some of the more severe changes that the House has in mind. And when you're talking about Trump's budget proposal, the president's budget proposal is definitely what the White House wants to do on things, but it's not necessarily what Congress is going to do. And to be perfectly honest, I think we talked about this maybe last week,

where Congress is so behind on appropriations and actually putting the budget together that what the president wants in terms of the budget proposal is probably quite a ways off. But it's real. It's definitely a real thing that he's going to be putting pressure once they get through the reconciliation package on Congress to do the things that he wants related to education and everything else. Yeah.

Ooh, I know, everybody. It's a lot of stuff. It's a lot of stuff. And it's complicated, but we're going to work through it together. We'll try to do it. Yes.

That is it for our first installment of our deep dive all week long into the reconciliation bill. Tomorrow, we're going to turn to some of the tax elements of the bill and what they could mean for businesses, especially small businesses, and keep those questions coming. Yes, please let us know what you're curious about. You can send us voice memos to makemesmartatmarketplace.org, or as always, you can leave a voicemail at 508-UBSMART.

This episode of Make Me Smart was produced by Minju Park with help from Courtney Bergseger. Today's program was engineered by Jake Cherry. Daisy Palacios is our supervising senior producer. Nancy Pergali is executive producer of Marketplace Shows. And Joanne Griffith is our chief content officer.

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