Senate Republicans recently unveiled their suite of higher education reform proposals, part of a broader tax-and-spending bill making its way through Congress. The package is strong: it would impose commonsense limits on federal student loans and create a saner loan repayment system. However, it forgoes obvious changes that would save taxpayers more money and would better hold colleges accountable for poor earnings outcomes.

The Senate will need to approve the full package, and lawmakers must reconcile its differences with another higher education reform plan recently passed the House. There are more steps before these changes become reality, but the likely shape of upcoming legislation is emerging. Here are the policies the Senate proposes:

Loan Limits

Currently, federal loans to graduate students and parents of undergraduates are effectively unlimited. The Senate package would cap loans to parents at $20,000 per year per child, with a $65,000 lifetime limit. Most graduate students would face a cap of $20,500 per year ($100,000 lifetime), while professional programs like law and medicine have higher limits of $50,000 per year ($200,000 lifetime). There are no changes for loans to undergraduates, which current law caps at relatively low levels. Colleges could also set lower loan limits for certain programs if they choose.

The Senate’s proposed loan limits are long overdue. They should constrain rises in tuition and fees, while limiting subsidies to high-cost programs of questionable economic value. For instance, programs like the University of Southern California’s $115,000 online Master of Social Work will likely need to lower their costs or close altogether.

Repayment

The Senate plan mirrors some of House Republicans’ best ideas on student loan repayment. Both proposals pare down the confusing array of repayment options to a fixed-payment plan and the new Repayment Assistance Plan (RAP). RAP ties students’ payments to their incomes but waives unpaid interest and ensures borrowers’ loan balances always go down if they make payments on time. This fixes one of the student loan program’s most glaring problems: rising balances.

Both proposals allow borrowers who currently have loans outstanding to choose the Income-Based Repayment (IBR) plan, which sets loan payments at 15 percent of discretionary income and discharges remaining balances after 25 years. Unlike the House proposal, the Senate bill sets these parameters at 10 percent of discretionary income and 20 years for more recent borrowers, which will likely increase the cost of the bill. Other repayment plans, including President Biden’s SAVE plan, are repealed for all borrowers under both proposals.

Accountability

The Senate would hold colleges to the principle of “do no harm”—the bill removes degree programs’ eligibility for federal student loans if their former students’ earnings are too low. For undergraduate programs, median earnings of former students four years after exit must exceed the earnings of a comparable high school graduate. For most graduate programs, median earnings six years after entry must exceed the earnings of a comparable bachelor’s degree holder, or a comparable bachelor’s degree holder in that same field of study, whichever is lower. This timeline becomes 10 years after entry for long-duration graduate programs like PhDs.

These proposals improve on the status quo but are still incomplete. The accountability system incorporates no measure of prices or student debt burdens—if graduates’ median earnings are one dollar above the benchmark, colleges face no accountability, even if debt burdens are unaffordable. The House bill addresses this concern by requiring colleges to “share the risk” of unpaid student loans, a provision absent from the Senate bill.

The Senate’s earnings benchmarks are also weak tea. They do not apply to certificate programs, which often have very poor earnings outcomes. Additionally, the adjustment for field of study lets through some low-performing programs. While a master’s degree in fine arts might pay more than a bachelor’s in fine arts, its absolute earnings are still very low. The government shouldn’t subsidize such programs through the student loan system at all.

Other Omissions

The Senate package saves about $30 billion less than its House counterpart, according to a preliminary analysis, as it axes some of the House’s money saving-ideas. The House would have eliminated an in-school interest subsidy for some loans (saving $20 billion) and redefined full-time enrollment for Pell Grant recipients (saving $7 billion); neither of these policies are included in the Senate package.

Overall, the Senate has proposed a formidable package of reforms. Its strongest components are commonsense caps on lending and adoption of the House’s Repayment Assistance Plan. The Senate could find more savings—in a bill expected to cost trillions, every penny counts. Its accountability measures could also be strengthened by holding programs accountable for high costs and low earnings. Even so, the Senate’s package dramatically improves on the status quo. Advocates of fiscal responsibility and saner lending should be optimistic about the future of the student loan program.