Student Debt Crisis: Trump's New Rules Could Devastate Borrowers
Wednesday, May 14, 2025 12:55 pm ET
2min read The Trump administration is shaking up the student loan landscape, and it's not pretty. With the elimination of the SAVE plan and the resurgence of income-driven repayment (IDR) plans, millions of borrowers are facing a financial nightmare. The changes are drastic, and the impact will be felt for years to come. Let's break it down.
THE SAVE PLAN IS GONE, AND PAYMENTS ARE SKYROCKETING
The Biden administration's Saving on a Valuable Education (SAVE) plan was a lifeline for many borrowers, offering lower monthly payments and quicker debt erasure. But Trump has axed it, and payments are soaring. Borrowers who were paying $250 a month are now facing $900, and those paying $500 are staring down nearly $5,000. This is a disaster for lower-income borrowers, who will struggle to keep up with these sky-high payments.
IDR PLANS ARE BACK, BUT NOT FOR LONG
The Department of Education pulled the plug on IDR applications, leaving millions of borrowers in the lurch. The American Federation of Teachers (AFT) had to sue to get the system back online. But even with IDR plans available, the damage is done. Borrowers are panicked, and defaults are looming.
DEFAULTS ARE COMING, AND THEY'RE GOING TO BE UGLY
With SAVE gone and IDR plans under threat, millions of borrowers are on the brink of default. The AFT estimates that by the end of this year, 8 to 10 million people will have their credit damaged. Loan servicers aren't warning borrowers, so many are learning about the changes too late. This is a recipe for financial ruin.
PUBLIC SERVICE LOAN FORGIVENESS IS IN JEOPARDY
The Public Service Loan Forgiveness (PSLF) program is a lifeline for public service workers, but it's under threat. Without IDR plans, the path to relief is blocked. Rachel Dubreuil, a social studies teacher in Connecticut, was within inches of having her debt canceled through PSLF. Now, she's stuck with $88,000 in debt and no idea how she'll manage.
THE AFT IS FIGHTING BACK, BUT IT'S AN UPHILL BATTLE
The AFT has been a champion for borrowers, hosting debt clinics, providing guidance, and holding bad actors accountable. But with the Trump administration's changes, the union is facing an uphill battle. The government is garnishing Social Security and tax refunds, and Trump is threatening to garnish paychecks too.
THE RECONCILIATION BILL IS A DISASTER FOR COLLEGE AFFORDABILITY
The proposed reconciliation bill slashes $330 billion in college affordability, attacking Pell grants and graduate PLUS loans. This is a disaster for students and borrowers alike. The AFT is fighting to make IDR plans affordable and to ensure PSLF works, but it's an uphill battle.
WHAT CAN YOU DO?
If you're a borrower, you need to act now. Contact your loan servicer, sign up for an IDR plan, and consider loan consolidation. The AFT is offering resources and guidance, so take advantage of them. And if you get a letter indicating your money will be garnished, contact your congressional representative immediately.
THE MARKET IS IN TURMOIL, AND STUDENT DEBT IS A BIG PART OF IT
The market hates uncertainty, and the student debt crisis is a big part of it. With millions of borrowers on the brink of default, the economy is in for a rough ride. The government will have to absorb the costs of defaulted loans, which could increase the national debt and lead to higher taxes or reduced government services.
THE BOTTOM LINE
The Trump administration's changes to student loan policies are a disaster for borrowers and the economy. The SAVE plan is gone, payments are skyrocketing, and defaults are looming. The AFT is fighting back, but it's an uphill battle. If you're a borrower, you need to act now. Contact your loan servicer, sign up for an IDR plan, and consider loan consolidation. And if you get a letter indicating your money will be garnished, contact your congressional representative immediately. This is a crisis, and it's time to take action.
THE SAVE PLAN IS GONE, AND PAYMENTS ARE SKYROCKETING
The Biden administration's Saving on a Valuable Education (SAVE) plan was a lifeline for many borrowers, offering lower monthly payments and quicker debt erasure. But Trump has axed it, and payments are soaring. Borrowers who were paying $250 a month are now facing $900, and those paying $500 are staring down nearly $5,000. This is a disaster for lower-income borrowers, who will struggle to keep up with these sky-high payments.
IDR PLANS ARE BACK, BUT NOT FOR LONG
The Department of Education pulled the plug on IDR applications, leaving millions of borrowers in the lurch. The American Federation of Teachers (AFT) had to sue to get the system back online. But even with IDR plans available, the damage is done. Borrowers are panicked, and defaults are looming.
DEFAULTS ARE COMING, AND THEY'RE GOING TO BE UGLY
With SAVE gone and IDR plans under threat, millions of borrowers are on the brink of default. The AFT estimates that by the end of this year, 8 to 10 million people will have their credit damaged. Loan servicers aren't warning borrowers, so many are learning about the changes too late. This is a recipe for financial ruin.
PUBLIC SERVICE LOAN FORGIVENESS IS IN JEOPARDY
The Public Service Loan Forgiveness (PSLF) program is a lifeline for public service workers, but it's under threat. Without IDR plans, the path to relief is blocked. Rachel Dubreuil, a social studies teacher in Connecticut, was within inches of having her debt canceled through PSLF. Now, she's stuck with $88,000 in debt and no idea how she'll manage.
THE AFT IS FIGHTING BACK, BUT IT'S AN UPHILL BATTLE
The AFT has been a champion for borrowers, hosting debt clinics, providing guidance, and holding bad actors accountable. But with the Trump administration's changes, the union is facing an uphill battle. The government is garnishing Social Security and tax refunds, and Trump is threatening to garnish paychecks too.
THE RECONCILIATION BILL IS A DISASTER FOR COLLEGE AFFORDABILITY
The proposed reconciliation bill slashes $330 billion in college affordability, attacking Pell grants and graduate PLUS loans. This is a disaster for students and borrowers alike. The AFT is fighting to make IDR plans affordable and to ensure PSLF works, but it's an uphill battle.
WHAT CAN YOU DO?
If you're a borrower, you need to act now. Contact your loan servicer, sign up for an IDR plan, and consider loan consolidation. The AFT is offering resources and guidance, so take advantage of them. And if you get a letter indicating your money will be garnished, contact your congressional representative immediately.
THE MARKET IS IN TURMOIL, AND STUDENT DEBT IS A BIG PART OF IT
The market hates uncertainty, and the student debt crisis is a big part of it. With millions of borrowers on the brink of default, the economy is in for a rough ride. The government will have to absorb the costs of defaulted loans, which could increase the national debt and lead to higher taxes or reduced government services.
THE BOTTOM LINE
The Trump administration's changes to student loan policies are a disaster for borrowers and the economy. The SAVE plan is gone, payments are skyrocketing, and defaults are looming. The AFT is fighting back, but it's an uphill battle. If you're a borrower, you need to act now. Contact your loan servicer, sign up for an IDR plan, and consider loan consolidation. And if you get a letter indicating your money will be garnished, contact your congressional representative immediately. This is a crisis, and it's time to take action.
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