Senate Republicans’ proposal to overhaul student loan repayment could trigger a surge in defaults, one expert said.

The Senate GOP reconciliation bill’s higher education provisions “would cause widespread harm to American families,” Sameer Gadkaree, the president of The Institute for College Access & Success, said in a statement. The proposals do so by “making student debt much harder to repay” and “unleashing an avalanche of student loan defaults,” he wrote.

The Senate Committee on Health, Education, Labor and Pensions introduced bill text on June 10 that would change how millions of new borrowers pay down their debt. The proposal made only minor tweaks to the repayment terms in the legislation House Republicans advanced in May.

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With control of Congress, Republicans can pass their legislation using “budget reconciliation,” which needs only a simple majority in the Senate.

Gadkaree and other consumer advocates have expressed concerns about how the new terms would imperil many borrowers’ ability to meet their monthly bills — and to ever get out of their debt.

More than 42 million Americans hold student loans, and collectively, outstanding federal education debt exceeds $1.6 trillion. More than 5 million borrowers were in default as of late April, and that total could swell to roughly 10 million borrowers within a few months, according to the Trump administration.

But under the Senate Republican proposal, there would be just two repayment plan choices for those who borrow federal student loans after July 1, 2026. (Current borrowers should maintain access to other existing repayment plans.)

As of now, borrowers who enroll in the standard repayment plan typically get their debt divided into 120 fixed payments, over 10 years. But the Republicans’ new standard plan would provide borrowers fixed payments over a period between 10 years and 25 years, depending on how much they owe.

For example, those with a balance exceeding $50,000 would be in repayment for 15 years; if you owe over $100,000, your fixed payments will last for 25 years.

Borrowers would also have an option of enrolling in an income-based repayment plan, known as the “Repayment Assistance Plan,” or RAP.

Monthly bills for borrowers on RAP would be set as a share of their income. Payments would typically range from 1% to 10% of a borrower’s income; the more they earn, the bigger their required payment. There would be a minimum payment of $10 a month for all borrowers.

While IDR plans now conclude in loan forgiveness after 20 years or 25 years, RAP wouldn’t lead to debt erasure until 30 years.

The plan would offer borrowers some new perks, including a $50 reduction in the required monthly payment per dependent.

Still, Kantrowitz said: “Many low-income borrowers will be in repayment under RAP for the full 30-year duration.”

A typical student loan borrower with a college degree could pay an extra $2,929 per year if the Senate GOP proposal of RAP is enacted, compared to the Biden administration’s now blocked SAVE plan, according to a recent analysis by the Student Borrower Protection Center.

The Center included the calculations in a June 11 letter to the Senate Committee on Health, Education, Labor and Pensions.

“As the Committee considers this legislation, it is clear that a vote for this bill is a vote to saddle millions of borrowers across the country with more student loan debt, at the same moment that a slowing economy, a reckless trade war, and spiraling costs of living squeeze working families from every direction,” Mike Pierce, the executive director of the Center, wrote in the letter.

The second-quarter estimated tax deadline is June 16 — and on-time payments can help you avoid “falling behind” on your balance, according to the IRS.

Typically, quarterly payments apply to income without tax withholdings, such as earnings from self-employment, freelancing or gig economy work. You may also owe payments for interest, dividends, capital gains or rental income. 

The U.S. tax system is “pay-as-you-go,” meaning the IRS expects you to pay taxes as you earn income. If your taxes are not withheld from earnings, you must pay the IRS directly.  

The quarterly tax deadlines for 2025 are April 15, June 16, Sept. 15 and Jan. 15, 2026. These dates don’t line up with calendar quarters and so can easily be missed, experts said.

The second-quarter deadline in particular “often sneaks up on people,” especially higher earners or business owners with irregular income, said certified financial planner Nathan Sebesta, owner of Access Wealth Strategies in Artesia, New Mexico.

“I often see clients forget capital gains, side income, or large distributions that were not subject to withholding,” Sebesta said.

Quarterly payments are due for individuals, sole proprietors, partners and S corporation shareholders who expect to owe at least $1,000 for the current tax year, according to the IRS. The threshold is $500 for corporations. 

If you skip the June 16 deadline, you could see an interest-based penalty based on the current interest rate and how much you should have paid. That penalty compounds daily.

On-time quarterly payments can help avoid “possible underpayment penalties,” the IRS said in an early June news release. 

Employer withholdings are considered evenly paid throughout the year. By comparison, quarterly payments have set time frames and deadlines, said CFP Laurette Dearden, director of wealth management for Dearden Financial Services in Laurel, Maryland.

“This is why a penalty often occurs,” said Dearden, who is also a certified public accountant.

That threshold increases to 110% if your 2024 adjusted gross income was $150,000 or more, which you can find on line 11 of Form 1040 from your 2024 tax return.

However, the safe harbor protects you only from underpayment penalties. If you don’t pay enough, you could still owe taxes for 2025, experts say.

There are all sorts of ways for consumers to misuse credit cards, from failing to pay monthly bills in full to running up your balance. But here’s one risky behavior that experts say you likely haven’t heard of: “credit cycling.”

Credit cards come with a spending limit. Cardholders are usually aware of this limit, which represents the overall cap to how much they can borrow. The limit resets with each billing statement when users pay their bill in full and on time.

Users who credit-cycle will reach that limit and quickly pay down their balance; this frees up more headroom so consumers can effectively charge beyond their typical allowance.

Doing this occasionally is usually not a big deal, experts said. It’s akin to driving a few miles per hour over the speed limit — something less likely to get a driver pulled over for speeding, said Ted Rossman, senior industry analyst at CreditCards.com.

But consistently “churning” through available credit comes with risks, Rossman said.

For example, card issuers may cancel a user’s card and take away their reward points, experts said. This might negatively impact a user’s credit score, they said.

“If there’s even the slightest chance credit cycling can go sideways, it’s best not to do it and look for alternatives,” said Bruce McClary, senior vice president at the National Foundation for Credit Counseling. “You have to be very careful.”

The average American’s credit card limit was about $34,000 at the end of the second quarter of 2024, according to Experian, one the three major credit bureaus. (This was the limit across all their cards.)

The amount varies across generations, and according to factors like income and credit usage, according to Experian.

It’s understandable why some consumers would want to credit cycle, experts said.

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Certain consumers may have a relatively low credit limit, and credit cycling might help them pay for a big-ticket purchase like a home repair, wedding or a costly vacation, experts said. Others may do it to accelerate the rewards and points they get for making purchases, they said.

But card issuers would likely see repeat offenders as a red flag, Rossman said.

Maxing out a card frequently may run afoul of certain terms and conditions, or signal that a user is experiencing financial difficulty and struggling to stay within their budget, he said.

Issuers may also view it as a potential sign of illegal activity like money laundering, he said.

“You could be putting yourself at risk by appearing to be a risk in that way,” McClary said.

Experts generally recommend keeping credit utilization below 30%, and below 10% if you really want to improve your credit score.

A canceled card would reduce one’s overall credit limit, raising the odds that a user’s credit utilization rate would increase if they have outstanding debt on other credit cards, McClary said.

Further, a card company could flag misuse as a reason for the account closure, potentially making the user look like more of a risk to future creditors, he added.

Consistently butting up against one’s credit limit also increases the chances of accidentally breaching that threshold, McClary said. Doing so could lead creditors to charge over-limit fees or raise a user’s interest rate, he said.

Consumers who credit-cycle should be cognizant of any recurring monthly subscriptions or other charges that might inadvertently push them over the limit, he said.