President Joe Biden has made student loan forgiveness a central issue of his administration, pushing efforts to cancel debt as well as reduce payments for millions of borrowers. But with President-elect Donald Trump to come back at the White House in January, the future of these efforts is now in question.
During the presidential debate with Vice President Kamala Harris, Trump called Mr. Biden’s efforts to forgive student loan borrowers a “total disaster.” Although he did not explicitly discuss his plans for student loans, he called for eliminating the Department of Education, which manages the $1.6 trillion federal student loan portfolio.
It’s unclear which agency or group would handle these loans if the Department of Education were to be eliminated, a step that would require congressional approval. The Trump campaign did not immediately respond to a request for comment on Trump’s plans for student debt relief.
There’s a lot at stake for the 46 million Americans who hold $1.7 trillion in student loans, a financial burden that about half of borrowers say has impacted their lifestyle choices, delaying the buying a home or starting their family, according to a 2021 Morning Consult study. Mr. Biden’s term is coming to an end with two of his major relief efforts tied up in courtwhich adds to the uncertainty about the impact of Trump’s second presidency on these plans.
“We know what’s in Project 2025, and we know what we saw under the first Trump administration,” Persis Yu, legal counsel for the Student Borrower Protection Center, an advocacy group for people with student loans . “We should just be very concerned about what the next administration will mean for borrowers.”
The incoming Trump administration is unlikely to continue the Biden administration’s efforts to combat ongoing lawsuits targeting current student debt relief efforts, according to NerdWallet loan expert Kate Wood in an email. email. This could mean the end of these programs, experts say.
“Programs created by the Biden administration or to which access was expanded through regulatory changes could be easily canceled,” she added.
What did Trump say about student loan relief?
During his September debate with Vice President Kamala Harris, Trump criticized the Biden administration’s efforts.
“When they said they were going to terminate student loans, it ended up being a total disaster. He withdrew and was rejected again by the Supreme Court,” Trump said, referring to the decision of the High Court. Decision 2023 which blocked Mr. Biden’s initial student loan forgiveness program, which would have provided up to $20,000 in relief per borrower.
“So all these students were taunted with this whole story, this whole idea. And how unfair that would have been. That’s part of the reason they lost,” he added.
What does Project 2025 say about student loans?
Project 2025 — an initiative overseen by the conservative Heritage Foundation to guide the next Republican president in an overhaul of the executive branch — calls for abolishing the Department of Education and says student loans should be handled by the private sector. He also advocates for dropping student loan relief.
“The new administration must end the practice of treating the federal student loan portfolio as a campaign fund intended to attract political support and votes,” says Project 2025. “The new administration must end the abuse in loan forgiveness programs Borrowers should be expected to repay their loans.”
It is unclear whether Trump shares these views, although he has called for an end to the Department of Education. During his election campaign, Trump distanced himself from the 2025 plan, calling some of the proposals “appalling.”
What is the status of Biden’s student loan relief plans?
Currently, there are two student loan relief plans that are stuck in court, both challenged by Republican-led states.
THE Save on valuable educationor SAVE, plan, is an income-driven repayment program, which sets a borrower’s monthly payment at their income, thereby reducing their financial costs. Some low-income SAVE borrowers have monthly payments of $0.
However, the 8 million enrolled in the plan are now in limbo, after court rulings blocked the Biden administration from implementing the plan. Currently, these borrowers are in abstention until Aprilmeaning their loans are essentially on hold while the Biden administration defends the plan in court.
Furthermore, another Biden administration plan to use The Higher Education Act, aimed at wiping out some or all of the student debt held by 30 million borrowers, also hit a legal hurdle, with a court putting the plan on hold in October.
In the latter case, Republican states argued that Mr. Biden’s plan aimed to “illegally cancel up to hundreds of billions of dollars in student loans en masse.” The Department of Education has pledged to defend both plans.
What could happen to these programs under Trump?
Bob Eitel, who served in the first Trump administration as a senior adviser to the education secretary, said he expects the president-elect to decide whether to repeal the proposed loan forgiveness regulations .
“The Trump administration may pursue different avenues for loan relief, but it will not be the types of massive, blanket forgiveness that the current administration has sought,” said Eitel, president and co-founder of the Defense of Liberty Institute for Policy Studies.
Some other student loan relief programs could remain, such as the Public Service Loan Forgiveness program, which would be harder to eliminate but could become less accessible, NerdWallet’s Wood said.
This program, which was signed into law by former President George W. Bush in 2007, cancels student debt for public employees like teachers and police officers after 10 years of repayment. The Biden administration reworked PSLF to make it easier for people to qualify for forgiveness, after the vast majority of people who applied were they were told they were not eligible.
During Trump’s first term, the Department of Education was overseen by Betsy DeVoswhich favored K-12 school choice and also called for deep spending cuts. She too proposed ending the Public Service Loan Forgiveness Program, although it was not successful.
Do Americans Support Student Loan Relief?
It’s an issue that divides voters, with people’s opinions influenced by their political leanings and whether they have student debt themselves, according to an AP-Norc poll released in June.
Only 15% of Republicans say student loan forgiveness is important, compared to 58% of Democrats. According to the survey, more than half of people currently paying off student loans say it’s an important problem, compared to a third of those who have no experience with student debt.
Republicans have opposed Mr. Biden’s efforts because they could deprive some lenders of revenue, while others oppose canceling loans for those enrolled in college, given that a minority of Americans have college degrees.
The Biden administration is “saddling American workers with an Ivy League debt,” Missouri Attorney General Andrew Bailey said in a September statement.
contributed to this report.
