House Republicans to tax scholarships, end student loan repayment plan

Robert Besser
13 Feb 2025, 19:33 GMT+10

Republicans in Congress are looking for ways to cut government spending, and some lawmakers have suggested new taxes on college scholarships, ending some student loan repayment plans, and increasing taxes on university endowments
These ideas are being discussed as part of a plan to extend tax cuts from Donald Trump’s first term. It is unclear if they will become law, but many higher education advocates are worried
One proposal would eliminate some student loan repayment options, including the SAVE plan, which helps low-income borrowers by reducing or pausing payments

WASHINGTON, D.C.: Republicans in Congress are looking for ways to cut government spending, and some lawmakers have suggested new taxes on college scholarships, ending some student loan repayment plans, and increasing taxes on university endowments.

These ideas are being discussed as part of a plan to extend tax cuts from Donald Trump's first term. It is unclear if they will become law, but many higher education advocates are worried.

One proposal would eliminate some student loan repayment options, including the SAVE plan, which helps low-income borrowers by reducing or pausing payments. Another idea would allow borrowers to recover from loan defaults twice instead of just once.

There is also talk of taxing scholarships and fellowships that are currently tax-free when used for tuition. This could make college more expensive for students and families.

Lawmakers are also considering increasing the tax on university endowments from 1.4% to 14%, which would apply to more colleges. Other proposals include fines for schools that violate anti-discrimination rules under Title VI of the Civil Rights Act.

It is uncertain when these ideas might be introduced, but Republicans could try to pass them through a budget process that requires only their votes.

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