The past four years have been filled with highs and lows for federal student loan borrowers, as nearly 5 million people have benefited from $175 billion in debt forgiveness from President Joe Biden, and others have seen their prospects for relief become entangled in lawsuits. The next four years could be just as tumultuous if Republicans control both the chambers of Congress and the White House.
President-elect Donald Trump and Republicans in Congress are hostile to Biden’s student loan forgiveness policies, many of which have ended up in court as a result of lawsuits filed by states led by the Republican Party. Although Trump has not yet detailed his plans for student loans, higher education experts fear the new administration will be much more restrictive with debt forgiveness and the overall federal student loan program, especially with the help of the Republican majority in Congress.
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Millions of borrowers on low-cost repayment plans could see their monthly student loan bills rise, while programs that forgive student debt for public sector workers like teachers could be on the chopping block. And some loan programs that parents use to finance their children’s education could also be at risk, experts say.
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Low hanging fruit
In many ways, the Trump administration could radically reverse Biden’s student loan policies without doing much. Several key policies are embroiled in lawsuits, and the new administration may simply choose to stop defending them.
“Some of the first victories for the new administration’s education policies may come from them sitting on their hands and waiting for some of these policies that were never legal to be overturned by the courts,” says Michael Brickman , a colleague. at the American Enterprise Institute, who served as a senior advisor in the Department of Education during the first Trump administration.
Chief among them is a lawsuit to end Biden’s signature student loan repayment program, Saving on a Valuable Education Plan, better known as Save. The plan offers lower monthly payments and a faster path to loan cancellation. More than 8 million people have enrolled in the program since it began last fall, and another 414,000 have had their debts forgiven. Republican attorneys general filed two lawsuits against the plan, arguing that Congress never intended such generous terms. The courts blocked implementation of the plan as the legal proceedings progressed, causing the Ministry of Education to delay loan payments for millions of enrollees.
Now the fate of the plan rests in the hands of the U.S. Court of Appeals for the 8th Circuit. If the court fails to make a decision before Trump takes office, the new administration could take a different position on the case and refuse to continue the fight. Even if the program is deemed legal before the transition of power, the Trump administration could repeal the regulations underpinning the program.
“I could see a return to what existed under the previous Trump administration,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for loan servicers. “They could say, ‘Listen, we didn’t do anything with the repayment plans then, so we don’t need to do that now.’”
If Save does not exist, enrollees may be placed in the Standard 10-Year Repayment Plan or other income-driven repayment options. But the future of some of the other income-driven plans is unclear after the 8th Circuit cast doubt on the Department of Education’s ability to forgive loans through those programs. Whatever is decided, it will take time to dismantle Save and start paying back millions of borrowers. And the more than 8 million borrowers enrolled in Save are likely to face higher monthly bills under repayment plans with far less generous terms than under Save, said Abby Shafroth, director of the Student Loan Assistance Project at National Consumer Law Center.
The courts are also considering what to do about Biden’s second attempt at broad debt forgiveness and a new loan forgiveness rule for borrowers defrauded by their colleges.
Republican attorneys general issued an order in October blocking the Biden administration from implementing the debt relief order, an alternative to the plan that the Supreme Court rejected in 2023 amid ongoing litigation. If the scheme is deemed illegal, there is no indication the Trump administration would do anything to save it. The president-elect has expressed disdain for Biden’s debt cancellation efforts, calling them “despicable” at a rally in Wisconsin this summer.
The Trump administration could also sit back and let the courts strike down Biden’s update to borrower repayment rules, which settle the debts of students whose colleges used illegal or deceptive tactics to persuade them to borrow. The Court of Appeals for the 5th Circuit set aside the rules in April and sided with Career Colleges and Schools of Texas, which the court said was likely to succeed in proving that the Department of Education exceeded its authority with the regulation .
“If the government doesn’t defend these programs, there will be fewer ways for people who are really struggling with debt … to get out of debt and out from under that burden,” Shafroth said.
The Trump administration could also take a tougher path to undoing some student loan policies — by repealing Biden’s recent regulatory changes. That would affect the latest borrower defense rules, as well as updates to the closed school discharge and government loan forgiveness programs. The programs would remain on the books but would revert to the old terms unless the new administration tries to rewrite them.
During his first term, Trump tried to eliminate the public service program, which Congress created in 2007 to provide loan forgiveness to people who work for 10 years in public sector jobs such as teaching, nursing or social work. There was never enough political will to end the program, and experts don’t think that will be the case this time either.
“There is bipartisan support to help people who use their degrees become teachers and nurses and other things that really serve their communities,” Brickman said. “Biden’s divisive policymaking has led to the erosion of that support, but there is a fairly large group of people who agree that PSLF, as originally intended, is something they should support.”
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The future of lending
While the Trump administration has yet to release its agenda for federal financial aid, Republicans in Congress have a playbook: the College Cost Reduction Act. The legislation, sponsored by Rep. Virginia Foxx (R-North Carolina), failed to get a basic vote this year, but was revived and passed with Republican majorities in both chambers.
Among its many provisions, the bill would end Plus loan programs for graduate students and parents and limit the number of federal loans a student can take out. It would also prevent interest capitalization, end income-driven plans and require students to pay back only what they would have owed under a standard 10-year repayment plan.
By some estimates, the plan would increase student loan payments, leaving some in debt for the rest of their lives. Others argue that the legislation could provide much-needed streamlining to the cumbersome student loan system.
While some moderate Republicans were concerned about the bill, there is a path through a process called budget reconciliation that could allow a bill to pass the Senate with a simple 51-vote majority, said Jon Fansmith, senior vice president for government relations at the US government. Council on Education, in which colleges and universities are represented. Republicans in Congress could tie the legislation to Trump’s desired tax package. Because the Congressional Budget Office said the College Cost Reduction Act would save $185 billion over 10 years, it could be used to offset other expenses.
“With all the talk about moving a comprehensive tax package in the first 100 days through reconciliation, that’s certainly the kind of thing you could see being included because it’s a lot of savings that would allow money to be spent on other things.” spent,” Fansmith said.
Republicans in Congress could also turn to Project 2025, the right-wing policy blueprint created by the Heritage Foundation, for guidance on reforming the federal student loan system. The policy agenda, which Trump repeatedly disavowed during the campaign, calls for phasing out income-driven plans and replacing them with an option without any loan forgiveness. It also encourages the federal government to return to a system in which private lenders made student loans backed by government guarantees — a setup that the Obama administration ended nearly 15 years ago.
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Unfinished business
Although the Biden administration has approved about $175 billion in student loan forgiveness, not all of that debt has been forgiven yet. And if the administration is unable to process all discharges before leaving office, advocates fear borrowers will wait years for relief under Trump.
“We absolutely want to ensure that the Biden administration finishes the work it started,” said Ashley Harrington, senior director of policy and advocacy at the Project on Predatory Student Lending. “There are a number of group discharges that are not complete.”
Harrington, a former senior adviser at the Department of Education under Biden, said more than 145,000 former students of the defunct for-profit chain Corinthian Colleges are still waiting for loan forgiveness that the administration approved for cancellation in 2022.
During Trump’s first term, Education Secretary DeVos spent months upholding thousands of borrower credit claims approved by the Obama administration. Harrington also expects more of the same this time, making it critical that the Biden administration completes the discharges.
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