Donald Trump’s return to the Oval Office could bring significant changes to the landscape of student debt relief, reversing or stalling several programs aimed at alleviating the burden on borrowers. Throughout his previous term and campaign rhetoric, Trump has shown resistance to widespread debt cancellation efforts, which could signal a major rollback if he follows through with similar policies during his second term.
A History of Opposition to Debt Forgiveness
During his first administration, Trump took steps to limit the scope of debt cancellation for students defrauded by their schools and proposed eliminating the Public Service Loan Forgiveness (PSLF) program altogether. Conservative activist groups have already urged Trump to take similar actions in his second term, and his rhetoric during the 2023 Supreme Court ruling on Biden’s student debt forgiveness plan indicated continued opposition. Trump celebrated the Court’s decision, which blocked Biden’s plan to forgive roughly $430 billion in student loans, calling it unfair to those who had paid their debts “through hard work.”
While the Biden administration has waived $175 billion of student loans through various programs, several major initiatives aimed at further reducing the $1.7 trillion education loan debt have faced legal hurdles or are still in development. This leaves Trump with ample opportunity to unwind those efforts.
Biden’s Plan B Faces Uncertainty
Biden’s second attempt at large-scale student loan forgiveness—Plan B—faces an uncertain future. Proposed rules in April sought to cancel debt for an estimated 30 million Americans, including borrowers who owed more than their original balance or had been repaying for more than 20 years. However, this plan has been blocked by lawsuits filed by Republican state attorneys general. If Trump takes office, his administration could choose to not finalize the program’s rules, effectively shelving the proposal permanently. The same applies to a new initiative that would have cleared debts for borrowers experiencing financial hardship.
SAVE Program in Jeopardy
The Biden administration’s SAVE program, designed to reduce monthly payments for undergraduate loans and speed up forgiveness, is also at risk. SAVE ties monthly payments to just 5% of discretionary income, down from 10%. It has faced legal challenges from GOP-led states, and Trump could choose not to defend the program, potentially halting its progress. His administration might also replace the program entirely through regulatory changes, although this would be a long and complicated process.
Currently, 8 million borrowers are enrolled in the SAVE program, with their loans in interest-free forbearance until spring. Trump will need to decide whether to resume repayments or continue the pause.
Borrower Defense Rule and Public Service Loan Forgiveness
The borrower defense rule, which provides debt relief to students who were defrauded by their schools, could also face cuts. Trump’s first term saw significant changes to the rule under Education Secretary Betsy DeVos, limiting the number of students eligible for relief. The Biden administration revised the rule in 2022 to make it more inclusive, but this effort was blocked by lawsuits. Conservative groups, including the Heritage Foundation, have urged Trump’s team to rescind these revisions.
PSLF, which provides loan forgiveness to individuals working in government or nonprofit sectors after 10 years of payments, has been a target of Trump’s administration. The program had a 99% rejection rate when Trump was in office, due to strict eligibility requirements. Under Biden, the rules were relaxed, clearing $73.7 billion in debt. Trump’s next move regarding PSLF is unclear, but his administration has previously pushed for its elimination. While such a move would require Congressional approval, Trump could implement administrative changes that make it more difficult for borrowers to qualify.
What’s Next?
If Trump moves forward with these changes, the implications for student borrowers could be significant, especially for those relying on debt relief programs like PSLF and SAVE. However, the president-elect’s stance on education policy remains somewhat undefined, and his campaign did not propose specific measures to address student debt. Given the ongoing lawsuits and stalled regulations from the Biden administration, Trump’s administration will have considerable leeway to reshape the student loan landscape.
As Trump prepares to take office, the future of student debt relief programs appears to be in jeopardy, with conservative advocacy groups urging him to roll back many of the initiatives designed to ease the financial burden on borrowers.
Related topics:
