US President Donald Trump holds up outgoing President Joe Biden’s letter as he indicators government orders within the Oval Workplace of the WHite Home in Washington, DC, on Jan. 20, 2025.
Jim Watson | AFP | Getty Photos
With President Donald Trump again within the White Home and Republicans in command of Congress, consultants fear that quite a lot of student loan programs may now be in jeopardy.
At-risk packages embrace the U.S. Division of Training’s new reimbursement possibility for debtors — known as the Saving on a Valuable Education, or SAVE, plan — and the Biden administration’s more lenient bankruptcy policy.
In the meantime, Home Finances Committee Republicans are floating proposals that would scale back or get rid of extra scholar mortgage packages, together with the Biden administration-era guidelines that made it simpler for debtors to get debt reduction after they’re defrauded by their colleges, Politico reported final week.
Shopper advocates are anxious for debtors based mostly on Trump’s feedback about scholar mortgage reduction on the marketing campaign path. At one rally, he known as the Biden administration’s debt forgiveness efforts “vile” and “not even authorized.”
The White Home didn’t instantly reply to a request for remark.
Greater than 40 million People carry federal scholar loans, and the excellent debt exceeds $1.6 trillion, in response to larger training skilled Mark Kantrowitz.
Listed here are the packages consultants suppose are most in danger below the Trump administration.
SAVE plan
When SAVE launched in 2023, the Biden administration known as its new reimbursement plan for federal scholar mortgage debtors “essentially the most inexpensive scholar mortgage plan ever.” SAVE reduce many debtors’ month-to-month payments in half and shortened the timeline to mortgage forgiveness for these with smaller balances.
It shortly proved well-liked. To that time, round 8 million debtors signed up for the brand new income-driven reimbursement, or IDR, plan, the White Home had stated.
However the plan additionally shortly bumped into authorized troubles.
Republican attorneys common in Kansas and Missouri, who led the authorized challenges towards SAVE, argued that President Joe Biden was primarily looking for a roundabout approach to forgive scholar debt after the Supreme Court blocked its sweeping debt cancellation plan in June 2023. Resulting from these authorized actions, the plan has been on maintain since final yr.
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The plan is unlikely to outlive a second Trump time period, Kantrowitz stated.
“There are a number of strategies the Trump administration may use to kill the SAVE reimbursement plan,” he stated. “They may abandon the protection of the reimbursement plan within the pending lawsuits.”
“They may situation new rules to revoke the reimbursement plan,” or Congress may cross a regulation to cast off the plan, Kantrowitz added.
Presently, SAVE enrollees are excused from making funds whereas the plan is tied up within the courts. That reprieve might quickly finish, too, consultants stated.
Chapter protections
For many years, scholar mortgage debtors discovered it next to impossible to stroll away from their federal scholar debt in chapter. The Biden administration modified that.
Within the fall of 2022, the Division of Training and the Division of Justice collectively released updated bankruptcy guidelines to make the chapter course of for scholar mortgage debtors much less arduous. The Biden administration’s up to date coverage handled scholar loans like different varieties of debt in chapter court docket, consultants stated.
Trump is prone to rescind that steering, Kantrowitz stated.
“There could also be extra of a scorched earth method to opposing all makes an attempt to discharge federal scholar loans in chapter,” he stated.
Nonetheless, Malissa Giles, a shopper chapter legal professional in Virginia, stated she was hopeful that the steering will stay in place.
Nonetheless, her concern is that many jurisdictions could have new assistant U.S. attorneys, “and we might even see a shift within the method based mostly on altering politics and pressures of extra Republican-aligned U.S. attorneys.”
For now, Giles stated she was being extra conservative in what scholar mortgage chapter circumstances she took on.
Different scholar mortgage support in danger
Among the many current concepts floated by Home Finances Committee Republicans is the partial repeal of the Biden administration’s Borrower Defense rules, which made it simpler for debtors to get their debt excused when their college engaged in misconduct.
The GOP members are additionally reviewing reforms to Public Service Mortgage Forgiveness, together with the potential for “limiting eligibility for this system,” in response to the doc obtained by Politico.
They’re additionally considering eliminating the student loan interest deduction. That tax break permits qualifying debtors to deduct as much as $2,500 a yr in curiosity paid on eligible non-public or federal training debt. Earlier than the Covid pandemic, practically 13 million taxpayers took benefit of the deduction, in response to Kantrowitz.
