President Donald Trump has inherited a federal student loan system that looks considerably different from the one in place when he left office in early 2021.
Former President Joe Biden‘s tenure in the White House focused heavily on reducing the education debt burden for Americans. Although multiple loan forgiveness plans were eventually struck down, and the Saving on a Valuable Education (SAVE) plan is on hold pending a legal ruling, the Biden administration still achieved a remarkable feat by canceling federal student loans for 5 million borrowers over four years. In his final days in the White House, Biden issued another raft of loan relief totaling $600 million for 150,000 borrowers.
But through wide-ranging executive orders, Trump has already sought to undo Biden-era policies by enacting changes to federal government functions.
“A Trump administration likely will promote alternative approaches to the student debt crisis,” conservative activist and commentator Samuel Fisher told Newsweek. “Under a Trump administration, we could expect immediate moves to unfund the plans and go back to a time when not repaying your student loans had serious consequences.”
What Are Trump’s Plans for Student Loans?
With Trump back in power, it remains to be seen what policies he will enact with regards to student loans, something that has not been at the top of his agenda throughout his election campaign and his first two weeks in office. While official policy stances in this arena are thin on the ground, suggested legislation from various conservative lawmakers and groups can provide some insight into what debtors should expect.
While Trump has previously said he does not have any affiliation with Project 2025, the conservative manual does propose a single Income-Driven Repayment (IDR) plan. IDR plans, of which there are several, often provide a lower monthly payment compared to other plans because they are based on income and family size rather than loan amount.
Project 2025 also earmarks eliminating the IDR forgiveness provision, which allows borrowers to have their remaining balance forgiven after 20 or 25 years of payments.
Republicans have also put forward several changes to student loan relief and forgiveness in its recent reconciliation bill.
A priority for spending cuts in the House Budget Committee’s recently published memo is the SAVE program—the income-driven repayment plan that lowers borrowers’ payments, limits buildup of interest and allows borrowers to be eligible for loan forgiveness eventually.
The GOP has proposed a full repeal of Biden’s SAVE plan, which Republicans say would pocket $127.3 billion for the federal government over 10 years. Like what was already earmarked by Project 2025, the proposal aims to replace the SAVE plan and all other IDR plans with a repayment option that would not offer time-based student loan forgiveness.
The bill also calls for several other changes, including plans to “eliminate” parent PLUS loans, which are offered to parents of dependent undergraduate students, and grad PLUS loans, which are provided to graduate students. Student loan interest deductions—which allow qualifying borrowers to deduct up to $2,500 a year in interest from their income tax returns—are also facing the ax.
Kevin Thompson, finance expert and founder/CEO of 9i Capital Group, told Newsweek that “the outlook for student loan forgiveness is not promising. Any cuts to the program mean reduced funds for forgiveness and increased debt burdens for students.”
Student Borrower Protection Center Executive Director Mike Pierce said: “These dangerous cuts will cause chaos across the economy—causing monthly student loan payments to spike for millions of working families and making paying for college more expensive and risky.”
Other Republicans have offered more forgiving options for student borrowers. The Affordable Loans for Students Act, a bill from New York Representative Mike Lawler, would automatically reduce interest rates to 1 percent for new and existing federal student loans. According to the Education Data Initiative, interest rates for undergraduate loans sat at 6.53 percent at the end of 2024.
“Nowhere have costs skyrocketed more than in higher education. Sadly, with high interest rates, making even a dent in the principal balance can be a challenge,” Lawler said in November. “The Affordable Loans for Students Act will make higher education easier to access and student loans easier to pay back, instilling confidence in the affordability of college for all borrowers.”
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