As former President Donald Trump prepares for a return to office, the future of student loan forgiveness programs has come into question. Over the past few years, student debt relief initiatives have been a focal point of federal policy, with current programs aiming to reduce financial burdens for millions of Americans.
However, under the Trump administration, several of these programs could face significant restructuring or even elimination.
This article looks into the potential changes to student loan forgiveness policies and what they mean for borrowers.
Background on Current Student Loan Forgiveness Programs
The Biden administration introduced several initiatives to provide relief to borrowers, ranging from income-driven repayment plans to forgiveness options for public service employees.
Some of these programs are tied to specific employment sectors or personal circumstances, while others were created through executive actions without Congressional approval. This distinction may play a critical role in determining which programs Trump’s administration could alter directly, and which ones would require Congress to pass new legislation.
1. Changes to the SAVE Plan
The SAVE (Saving on a Valuable Education) Plan, one of the latest income-driven repayment plans introduced under Biden, was designed to make student loan payments more affordable. It caps borrowers’ monthly payments and limits interest accrual to prevent loan balances from growing uncontrollably. However, the SAVE Plan is currently under legal scrutiny, with a court injunction in place that blocks its implementation.
- What Could Happen: If the courts ultimately rule against the SAVE Plan, the Trump administration may simply allow the decision to stand, effectively ending the program. Additionally, even if the SAVE Plan survives in court, Trump could initiate a regulatory repeal to dismantle it.
- Takeaway: Borrowers relying on the SAVE Plan for reduced payments and eventual forgiveness may need to consider alternative income-driven repayment options.
2. Student Loan Forgiveness Under Income-Based Repayment (IBR)
Income-based repayment (IBR) remains one of the most established repayment options, with forgiveness available after 20 or 25 years of qualifying payments. Unlike the SAVE Plan, IBR was enacted through Congressional legislation, giving it a stronger legal foundation.
- What Could Happen: The Trump administration would have limited power to dismantle IBR without Congressional support. Instead, changes could come through administrative barriers, such as stricter oversight and delayed processing.
- Takeaway: While the IBR program may remain intact, it could become more challenging for borrowers to navigate or benefit from forgiveness.
3. Public Service Loan Forgiveness (PSLF)
Public Service Loan Forgiveness (PSLF) is designed to offer loan forgiveness to those working in eligible public service fields after making 10 years of qualifying payments. Recent regulatory updates under Biden expanded PSLF’s scope to include more types of employment and additional qualifying payment periods.
- What Could Happen: While Trump’s administration could roll back recent expansions, eliminating PSLF would require an act of Congress. Even with Republican control, repealing PSLF may face significant legislative obstacles.
- Takeaway: Public service workers may still access PSLF, though some of the new benefits and expansions under Biden could be reversed.
4. Borrower Defense to Repayment
The Borrower Defense to Repayment program provides relief to students whose schools misrepresented key aspects of their programs. Since its inception, the program has seen multiple revisions, with Trump’s prior administration tightening eligibility requirements and Biden’s administration later broadening them.
- What Could Happen: If the courts rule against Biden’s latest regulations, the Trump administration could let the stricter 2019 rules remain, making it more difficult for borrowers to qualify.
- Takeaway: Borrowers with claims of school misconduct may face stricter requirements to prove their cases and qualify for loan forgiveness.
5. Total and Permanent Disability (TPD) Discharge
The Total and Permanent Disability (TPD) Discharge program allows borrowers with severe disabilities to qualify for student loan forgiveness. This program has bipartisan support and was expanded by Congress under Trump in 2017 to make forgiveness tax-exempt temporarily.
- What Could Happen: The TPD program is unlikely to be repealed, though Trump’s administration could roll back recent regulatory changes, such as removing the post-discharge income monitoring requirement.
- Takeaway: Disabled borrowers should continue to have access to the TPD discharge, but recent streamlining measures may be at risk.
Final Thoughts
As we look ahead to potential changes in federal student loan policies, borrowers need to stay informed and prepare for a variety of scenarios. Under Trump, programs like PSLF and IBR may survive but face procedural challenges, while initiatives like the SAVE Plan could be dismantled entirely.