Legislative Highlights June 2025

N.Y. Fed: U.S. Household Debt Increased 1 Percent in Q1 2025; Student Loan Delinquencies Rise Sharply

The Federal Reserve Bank of New York’s Center for Microeconomic Data on May 131 issued its Quarterly Report on Household Debt and Credit, which showed that total household debt increased by $167 billion (0.9 percent) in the first quarter of 2025, to $18.2 trillion. Credit card balances fell by $29 billion from the previous quarter and stood at $1.18 trillion at the end of March 2025. Auto loan balances also declined by $13 billion, representing the second drop from one subsequent quarter since 2011, and totaled $1.64 trillion. Mortgage balances grew by $199 billion and stood at $12.8 trillion. HELOC balances rose by $6 billion to $402 billion, representing the twelfth consecutive quarterly increase. Student loan balances grew by $16 billion and now stand at $1.63 trillion. Other balances, which include retail cards and other consumer loans, fell by $12 billion.

Aggregate delinquency rates increased from the previous quarter, with 4.3 percent of outstanding debt in some stage of delinquency, according to the report. Transition into early delinquency held steady for nearly all debt types, with the exception of student loans, which saw a large uptick in the rate at which balances went from current to delinquent due to the resumption of reporting of delinquent student loans on credit reports after a nearly five-year pause due to the pandemic. Transition into serious delinquency remained stable for auto loans, credit cards and other debt.

House Republicans Unveil Plan to Remake Student Loan System

Republicans on the House of Representatives Committee on Education and Workforce on April 29 unveiled a plan2 proposing to remake the federal student loan system while also cutting more than $330 billion in federal spending to help offset the cost of extending President Trump’s tax cuts. The Republican proposal includes eliminating previous income-contingent loan repayment options and replacing them with one “Repayment Assistance Plan.” It also ends the grad PLUS loan program, sets strict limits on parent PLUS loans, and envisions a new system whereby colleges and universities are forced to reimburse the federal government for a share of the debt when their students fail to repay their loans. “If there is any consensus when it comes to student loans, it’s that the current system is effectively broken and littered with incentives that push tuition prices upward,” House Education Committee Chair Tim Walberg (R-Mich.) said.3 “Schools have no reason to lower costs or ensure degrees align with employer needs, all while students and taxpayers pay the price.”

The committee’s ranking member, Rep. Bobby Scott (D-Va.), made clear that there’s no consensus on Republicans’ proposed remedy. “This current reconciliation plan would increase costs for colleges and students, limit students’ access to quality programs ... and then take the so-called ‘savings’ to pay for more tax cuts for the wealthy and the well-connected.” Because the proposal is part of a reconciliation package, Republicans need only a simple majority in the Senate — and a unified front in the House — to pass it.

For new borrowers taking out federal student loans after July 1, 2026, gone will be the Biden administration’s SAVE Plan, as well as a host of previous repayment plans, including the Income-Contingent Repayment and Pay As You Earn plans. In their place will be two options: (1) a “Standard Repayment Plan” with fixed monthly payments across a range of 10-25 years; and (2) a “Repayment Assistance Plan” that bases monthly payments on a borrower’s total adjusted gross income. The plan also waives unpaid interest that is not covered by the monthly payment, according to a Republican fact sheet.4

U.S. Courts Increase Budget Requests for Security, Public Defenders

The federal judiciary is requesting a nearly 10 percent increase in its budget for the next fiscal year,5 with two of its largest proposed increases going toward court security and federal public defenders. The federal courts are seeking a nearly 19 percent increase from last fiscal year in money for court security measures, for a total of $892 million. “These funds are necessary to address the substantial increase in threats against federal judges,” according to the budget request.6 It also states that the money will “mitigate the significant underfunding” of the court security account after it was held at a hard freeze for the past two fiscal years. An increase of $4.5 million will provide for an additional 15 filled bankruptcy judgeships anticipated in FY 2026.

GAO Investigating Trump Efforts to Dismantle CFPB

The U.S. Government Accountability Office (GAO) said that it will investigate President Donald Trump’s efforts to dismantle the Consumer Financial Protection Bureau (CFPB) after some Senate Democrats requested that the agency examine the ongoing actions and attempts to remove nearly all its staff. In a letter on April 23,7 A. Nicole Clowers, GAO managing director of congressional relations, replied to Sens. Elizabeth Warren (D-Mass.) and Andy Kim (D-N.J.) after they requested that the agency review the changes at the CFPB under the direction of the Department of Government Efficiency. The investigation8 comes after the Trump administration has attempted to conduct mass layoffs at the CFPB, cutting roughly 90 percent of its staff. A federal appeals court panel recently blocked the effort from moving forward by partially lifting a previous order that allowed the layoffs to proceed.

Expedited Vote on GENIUS Act Blocked in Senate

S. 919, the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act of 2025, failed to pass9 a full Senate vote with the 60 votes required to advance to avoid cloture, only receiving 49 votes after some Democratic Senators withdrew their support. Sen. Josh Hawley (R-Mo.) and Rand Paul (R-Ky.) also voted against the bill.

Senators who voted against the current version of the GENIUS Act, which looked to establish a regulatory framework for payment stablecoins, expressed concerns about whether rules on foreign issuers, national security and anti-money laundering were strong enough. Some also expressed concerns about the Trump family’s activities, including the launch of World Liberty Financial and the USD1 stablecoin.

The developments came after Senate Majority Leader John Thune (R-S.D.) on May 110 initiated a process to expedite a vote on the legislation and the bill had advanced out of the Senate Banking Committee in March. S. 919 is sponsored by Sen. Bill Hagerty (R-Tenn.) and co-sponsored by Sens. Tim Scott (R-S.C.), Cynthia Lummis (R-Wyo.), Kirsten Gillibrand (D-N.Y.) and Angela Alsobrooks (D-Md.).