Finance
What Trump’s second term could mean for student debt
Donald Trump’s Oval Office return could mean a major rollback of efforts to relieve student debt — at least if his campaign comments and first-term record are any indicator.
During his last administration, Trump took steps to limit debt cancellation for students defrauded by their schools and proposed eliminating the Public Service Loan Forgiveness program. Conservative activist groups have urged the president-elect to take similar action this time around.
And in 2023, when the Supreme Court struck down President Joe Biden’s first stab at a sweeping student debt forgiveness program, Trump applauded. The attempt to wipe out approximately $430 billion owed by borrowers was “very, very unfair to the millions and millions of people who have paid their debt through hard work” he told a crowd in New Jersey, adding that it was just “a way to buy votes.”
In all, the Biden administration has managed to waive $175 billion of student loans through various programs. But several of its major initiatives aimed at further reducing Americans’ $1.7 trillion pile of education loans have stalled in the face of legal challenges or are still in the process of being written by regulators, giving Trump ample room to try to unwind them if he chooses.
Based on a review of Trump’s website and platform, as well as conversations with advocates, it does not appear that Trump’s campaign released any specific proposals regarding student debt, though he has called for eliminating the Department of Education. A campaign spokesman did not respond to a request for comment about the incoming administration’s plans.
Here’s what debt cancellation initiatives remain in limbo — and what could change.
Read more: Do I qualify for student loan forgiveness?
Biden’s Plan B
The Biden administration’s second attempt to craft a wide-scale student loan forgiveness — nicknamed “Plan B” — looks to be in peril. In April, the Department of Education proposed new rules that would allow it to waive debt for an estimated 30 million Americans, including former students who owed more than their original principal or had been repaying their balances for more than 20 years.
That plan has been repeatedly blocked from going into effect thanks to a lawsuit by Republican state attorneys general. Trump’s Department of Education could shelve it for good by simply declining to finalize the program’s rules, since they were never officially completed. The same goes for a preliminary proposal the Biden administration unveiled last month that would have allowed it to clear away debts for borrowers facing financial hardships.
SAVE
The Biden administration’s generous loan repayment plan, known as SAVE, may also be on the chopping block. The program would slash monthly payments on undergraduate loans to just 5% of a borrower’s discretionary income, down from 10% today, while speeding up the path to forgiveness. But the scheme has been tied up in another lawsuit brought by GOP-led states, and Trump could, in theory, choose to stop defending the case. His administration could also use a formal regulatory rulemaking to replace the program entirely, though that would likely be a lengthy and intensive process.
In the meantime, there are 8 million borrowers enrolled in SAVE who currently have their loans paused in interest-free forbearance until the spring. Trump’s team will have to decide whether to make those individuals begin repaying again.
Borrower defense
It’s a similar story with the borrower defense rule, which allows former students to ask for debt relief if they have been scammed by their college, while putting the school on the hook for the cost.
Trump’s first-term secretary of education, Betsy DeVos, significantly narrowed the rule, with critics claiming that the changes blocked “nearly every avenue for individual borrowers” to actually use it. The Biden administration rewrote the regulation again in 2022 to make qualifying easier, but that effort too has been blocked by lawsuits. In its Project 2025 agenda, the conservative Heritage Foundation urged the next Republican administration to rescind the new version.
Public Service Loan Forgiveness
One of the Department of Education’s major priorities during the Biden years has been making it easier for borrowers to take advantage of the Public Service Loan Forgiveness, which cancels the debt of individuals who make 10 years of payments while working in government or for a nonprofit.
The program had a 99% rejection rate when borrowers first began applying for relief under the Trump administration. That was in large part thanks to its complicated rules that tripped up many former students, such as strict requirements about what kinds of payments did or didn’t count toward forgiveness. The Biden administration began loosening those rules beginning in 2021, and has so far cleared $73.7 billion of debt though the program.
How Trump will handle PSLF going forward is unclear. His last administration repeatedly called on Congress to eliminate the program.
“Incentivizing one type of work and one type of job over another is not called for,” DeVos told lawmakers in 2020. Such a dramatic move would still require an act of Congress, but short of that, the new administration could still make administrative or bureaucratic changes making it harder to qualify. Project 2025’s authors have argued that if Trump’s team can’t terminate PSLF, it should rescind the Biden administration’s rules widening the program.
Jordan Weissmann is a senior reporter at Yahoo Finance.
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