3 Likely Student Loan Changes as Trump Overhauls $1.6 Trillion System

Ladies and gentlemen, buckle up! The student loan system is about to undergo a seismic shift under the Trump administration. With $1.6 trillion in student debt hanging in the balance, we're looking at three major changes that could either save or sink your financial future. Let's dive in!

1. The SAVE Plan: RIP or Revival?

Former President Joe Biden's Saving on a Valuable Education (SAVE) repayment plan was a game-changer for 8 million borrowers. But now, it's in legal limbo, and the courts are debating its legality. Experts like Jason Delisle from the Urban Institute are calling it: "There isn't going to be a SAVE plan. It's either going down under legislation or it's going down by the judge's ruling." So, if you were counting on SAVE, it's time to find your Plan B!

2. Default Danger: The Clock is Ticking!

On October 1, 2024, the loan system's master clock resumed its ticking toward default for millions of borrowers. According to internal department data, as of March 7, 4.2 million borrowers were more than 90 days late on their payments, and nearly 5 million were between one and 90 days late. That's more than 1 in 5 of the country's roughly 43 million borrowers potentially on their way to default. Wil Del Pilar of the left-leaning EdTrust warns, "I think we're absolutely going to see an explosion of delinquency and defaults." So, if your phone rings and the Caller ID says it's your loan servicer, ANSWER IT! They're not trying to upsell you on anything. They have no product to offer. When you see them calling, it's probably because there's a problem. You need to answer.

3. Department of Education: The Great Shake-Up!

The Trump administration is working to shrink the Department of Education, and the impact goes beyond public schools. Student loan borrowers are dealing with a different set of rules for repayment now. Federal courts have paused popular Biden-era programs, and the Department of Education has removed applications for these plans from its website, effectively locking borrowers out from adjusting their plans if they can't pay the standard rate. If the department is eventually dismantled, student loans could land at the Treasury, Commerce, or the Small Business Administration. But experts like Andrew Gillen from the Cato Institute for Economic Freedom doubt the SBA's ability to handle over 40 million student loan borrowers. So, stay tuned for more chaos and confusion in the student loan world!

So, what's the bottom line? The student loan system is a mess right now, and the Trump administration's overhaul could either save or sink your financial future. Stay informed, stay vigilant, and stay tuned for more updates on this developing story!