Trump's Student Loan Agenda: What Borrowers Need to Know

As President-elect Donald Trump prepares to take office, millions of student loan borrowers are left wondering what his administration's policies will mean for them. With much of President Joe Biden's student loan agenda tied up in court, the incoming Trump administration could have a significant impact on millions of borrowers. Here's what borrowers need to know about what's at stake and what Trump could do.



Biden's SAVE repayment plan
One of the first things Trump's Department of Education may have to address is what to do with Biden's SAVE (Saving on a Valuable Education) repayment plan, which is currently on hold due to litigation. There are 8 million people enrolled in SAVE, and if it is struck down in court, they will have to move into a different repayment plan.

A lawsuit brought by several Republican-led states argues that the president doesn't have the authority to implement the plan. A ruling by the 8th US Circuit Court of Appeals is expected imminently. The Trump administration could decide to rescind the repayment plan, which was created by a regulatory process. It could also decide to stop defending the plan in court.

SAVE, which was launched last year, is meant to offer the most generous terms for low-income borrowers. Under the plan, some enrolled borrowers would see monthly payments as low as 5% of discretionary income. It also promises to cancel remaining student loan debt after making as little as 10 years of payments.

Borrowers enrolled in SAVE are not currently required to make payments since the Department of Education put them in an interest-free forbearance due to the litigation. The department is expected to reopen two older income-driven repayment plans in December, giving borrowers the option to switch into a plan that might be more affordable than the standard, 10-year plan.

Income-driven repayment plans calculate a borrower's monthly payment based on their income and family size, rather than the amount of debt they owe. In addition to lowering monthly payments, the plans promise to wipe away remaining student debt after a borrower makes a certain number of payments – usually 20 or 25 years’ worth.

Project 2025, the conservative blueprint published by the Heritage Foundation, calls for creating one new income-driven repayment plan and eliminating all the others. The policy paper also favors eliminating any loan forgiveness provision in the repayment plan – but this would likely require an act of Congress.

Trump has distanced himself from the 900-page playbook, but a CNN review found that at least 140 people who worked in the first Trump administration were involved.

Biden's $175 billion of student loan forgiveness
The Biden administration has canceled a record $175 billion of student loan debt for nearly 5 million people – largely through existing relief programs for public sector workers, disabled borrowers and people who were misled by their college.

Under Biden, the Department of Education temporarily expanded eligibility for the Public Service Loan Forgiveness program, recounted past payments to correct administrative errors, cut red tape for disabled borrowers and chipped away at a backlog of relief applications left over from the previous Trump administration.

Trump has not suggested that clawing back student loan forgiveness that was already granted is on his to-do list for his second term. It could be difficult both politically and logistically.

Efforts to reverse student debt relief would be expected to face legal challenges.

“If the new Trump administration attempts to reinstate discharged loans by reversing legal positions, they will be held accountable and spend much of the next four years tied up in court,” said Aaron Ament, president of the nonprofit National Student Legal Defense Network.

There are some borrowers who may have been notified by the Department of Educat

In conclusion, Trump's stance on student loan forgiveness could have a significant impact on the $1.6 trillion debt, as he has been critical of broad-based forgiveness plans and has proposed changes that could increase the burden on borrowers. The incoming Trump administration will need to address the fate of the SAVE repayment plan and the future of income-driven repayment plans like SAVE, PAYE, and ICR. Borrowers should stay informed about the latest developments and be prepared for potential changes in their repayment plans.