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President-elect Donald Trump is unlikely to continue many of Biden’s efforts to alleviate student debt.
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Borrowers are still waiting for a final court decision on the SAVE student loan repayment plan.
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Even if the plan survives the courts, Trump lawmakers and the Republican Party could take steps to rein in the aid.
During his two terms as president, Joe Biden has used several programs Cancel $175 billion in student debt for nearly 5 million borrowers. These efforts will likely disappear within the next four years.
Two of Biden’s major debt relief initiatives are tied up in court: his SAVE income-driven repayment plan, aimed at making student loan payments cheaper for borrowers, and his broader loan forgiveness plan, which will benefit more than 30 million borrowers.
Millions of federal borrowers remain in limbo as they await court decisions, and even if the plans survive the courts, President-elect Donald Trump is unlikely to prioritize the broad or incremental relief efforts that Biden planned to implement.
“The Biden administration has taken the position of, ‘We want to try to cancel as much debt as possible through various programs,’” Preston Cooper, a senior fellow at the conservative-leaning American Enterprise Institute, told Business Insider. “And to put it mildly, we won’t see that same attitude again under the Trump administration.”
Trump has provided minimal details about his plans for student loans once he takes office. However, he has criticized broad student loan forgiveness and has experienced backlogs in processing student loan forgiveness applications for key programs during his first term. Some higher education experts said borrowers can expect targeted aid and cheaper payments through SAVE to be phased out under Trump, and that the Republican Party’s control of Congress and the White House could make that happen more quickly can happen.
Jared Bass, the senior vice president for education at the left-leaning Center for American Progress, told BI that the Trump administration “will not be as friendly to student loan borrowers.”
“I think this will roll back a lot of the progress we’ve seen on borrowers and borrower protections,” Bass said.
While Trump’s team did not comment on future plans for debt relief, Trump called Biden’s student loan forgiveness “despicable” at a campaign rally in June and said the relief “isn’t even legal.”
The fate of cheaper payments under Biden’s SAVE plan
Biden’s SAVE plan lowered monthly payments for many borrowers based on their income and put them on a faster path to relief. It has been blocked since July after legal challenges from a group of Republican Party-led states.
Eight million enrolled borrowers have been granted an interest-free forbearance while they wait for a final court ruling, and Cooper said that even if SAVE prevails in federal court, Trump could work to abolish the plan.
“It seems probably more likely than not that it will be thrown out in court, but even if it isn’t, it’s likely that the Trump administration will take steps to undo that through rulemaking,” Cooper said.
Borrowers would likely lose the lower monthly payments they received under SAVE if Trump ends the program, Bass said.
Getting rid of SAVE would require the Trump administration to go through the negotiated regulatory process, which would take time and not happen immediately, and would likely put borrowers back on other existing income-driven repayment plans. Now that Republicans have a majority in the House of Representatives and the Senate, it is possible that lawmakers will also introduce legislation to rein in loan cancellation schemes like SAVE.
That could include the College Cost Savings Actintroduced by GOP Rep. Virginia Foxx in January. This bill would impose restrictions the ability of the Department of Education to create new repayment plans by limiting repayment options to a 10-year “mortgage plan” and an income-driven repayment plan.
“Student loan debt is skyrocketing, and completion rates are falling. There is bipartisan agreement that sustained reforms are needed to correct course,” Foxx previously told BI.
Uncertainty over government loan forgiveness and relief for defrauded borrowers
Two other major relief efforts from Biden are improvements to Public Service Loan Forgiveness (PSLF), which forgives student debt for government and nonprofit workers after 10 years of qualifying payments, and borrower defense, which forgives debt for borrowers defrauded by the schools. they were present.
Trump proposed eliminating PSLF during his first term, but that would require congressional approval and there is not yet enough support among lawmakers to get rid of the program. However, Cooper said it’s possible the Trump administration “could take a little more of a skeptical stance” on borrower defense applications as the Department of Education determines whether a borrower is subject to fraud and meets the qualifications for relief .
“I think if a loan cancellation program is clearly written into law, the government will have to implement that faithfully,” Cooper said. “If it’s a loan cancellation program that leaves a lot more discretionary power to the Department of Education, we could certainly see some big swings in policy.”
Rep. Bobby Scott, the top Democrat on the House Education Committee, urged Biden’s Education Department in a November letter to continue forgiving loans to borrowers who qualify for relief before Trump takes office.
“As the administration concludes its work, I have grave concerns about the future and whether much of this progress will be reversed, ultimately harming student loan borrowers, especially those who have already been promised debt relief through Borrower Defense and through Public Service Loan Forgiveness. Scott wrote.
Trump could also choose not to implement Biden’s broader relief plans, including a plan that aims to provide relief to categories of borrowers, including those whose balances have grown due to unpaid interest, along with a separate proposal to to provide assistance to borrowers in financial difficulties.
Read the original article on Business Insider
