Earlier this year, Representative Virginia Foxx (R-NC) introduced the College Cost Reduction Act (CCRA), a bill to reform higher education grant and loan programs and to establish new accountability rules for colleges. A key part of the bill would replace the myriad income-driven repayment (IDR) plans for federal student loans, including the Biden administration’s Saving on a Valuable Education (SAVE) plan, with a new repayment plan. The bill features income-based payments, a cap on total payments, and monthly subsidies that waive unpaid interest and reduce principal balances for certain borrowers.

In this brief, we compare the CCRA plan with the Biden administration’s SAVE plan, the most generous IDR plan. Using College Scorecard data, we estimate loan repayment trajectories for several types of borrowers under both plans. We find the following:

• The CCRA would enhance benefits for graduate borrowers, who typically have higher incomes, and would reduce benefits for undergraduate borrowers, particularly those who earn certificates and associate’s degrees, who generally have lower incomes.
• Under the CCRA plan, the typical borrower who completed a certificate or associate’s degree would be required to repay a substantially larger share of their original loan disbursement than they would under the SAVE plan.
• The typical borrower who completed a bachelor’s degree would be required to repay a larger share under the CCRA, though the difference is smaller than for those completing shorter-term credentials.
• Borrowers who completed a graduate program would typically be required to repay less under the CCRA than under SAVE because the CCRA’s cap on total payments is generally more beneficial than SAVE’s loan forgiveness benefits when debts and incomes are higher. But borrowers would repay more under the CCRA than under SAVE when using Public Service Loan Forgiveness.
• Most borrowers would receive only one of the two new benefits included in the CCRA—the interest and principal subsidies or the cap on total payments—but not both. Interest and principal subsidies typically reduce total payments for borrowers with low incomes, while the cap on total payments typically reduces total payments for borrowers with higher incomes, as long as their balances are high enough to extend repayment beyond 10 years.
• The CCRA would typically require lower total payments than the Obama-era IDR plan, Pay as You Earn, and the difference is substantial for graduate borrowers.

If policymakers want to distribute more of the benefits under this proposal to undergraduate borrowers and borrowers with low incomes, they could consider including a time-based loan forgiveness provision for undergraduate borrowers. They could also adjust the total payment cap for graduate borrowers to free up resources to offer undergraduate borrowers better protections against long repayment terms.