The past four years have been filled with highs and lows for federal student loan borrowers, as nearly 5 million have benefited from $175 billion in debt cancellation provided by President Biden, and others have watched their prospects for relief ensnared by litigation. The next four years could be just as tumultuous with Republicans controlling both chambers of Congress and the White House.
President-elect Donald Trump and congressional Republicans are hostile toward Biden’s student loan forgiveness policies, many of which have been tied up in the courts as a result of lawsuits brought by GOP-led states. While Trump has yet to detail his plans for student loans, higher education experts say the incoming administration could be far more restrictive with debt cancellation and the overall federal student loan program, especially with the help of the Republican majority in Congress.
Millions of borrowers in low-cost repayment plans could see their monthly student loan bill go up, while programs that canceled the student debt of public service workers such as teachers may be on the chopping block. And some loan programs that parents use to fund their children’s education could be in jeopardy, too, the experts say.
In many ways, the Trump administration could radically upend Biden’s student loan policies without doing much. Several key policies are tied up in litigation, and the new administration could simply choose to stop defending them.
“Some of the first victories for the new administration’s education policy may be just them sitting on their hands and waiting for some of these policies that never were legal in the first place to be struck down by the courts,” said Michael Brickman, a fellow at the American Enterprise Institute who was a senior adviser in the Education Department in the first Trump administration.
Chief among them is a lawsuit to end Biden's signature student loan repayment program, Saving on a Valuable Education Plan, commonly known as Save. The plan offers lower monthly payments and a faster path to loan cancellation. More than 8 million people have enrolled in the program since its debut last fall, and an additional 414,000 have had their debts forgiven. Republican state attorneys general mounted two lawsuits against the plan, arguing that Congress never envisioned such generous terms. The courts blocked the plan's implementation as the legal process played out, leading the Education Department to postpone the loan payments for millions of enrollees.
Now the fate of the plan is in the hands of the US Court of Appeals for the Eighth Circuit. If the court fails to hand down a decision before Trump takes office, the new administration could take a different position in the case and refuse to continue the fight. Even if the program is deemed legal before the transfer of power, Trump’s administration could rescind the regulation underpinning the program.
“I could see a return to what was in place under the previous Trump administration,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for loan servicers. “They could say, ‘Listen, we didn’t do anything with the repayment plans then, so there’s no need to now.’”
In the absence of Save, enrollees could be put into the standard 10-year repayment plan or other income-driven repayment options. But the future of some of the other income-driven plans is unclear after the Eighth Circuit cast doubt on the Education Department’s ability to forgive loans through those programs. No matter what is decided, it will take time to dismantle Save and shepherd millions of borrowers back into repayment. And the more than 8 million borrowers enrolled in Save will probably face higher monthly bills under repayment plans with far less generous terms than under Save, said Abby Shafroth, director of the student loan borrower assistance project at the National Consumer Law Center.
The courts are also considering what to do about Biden’s second attempt at broad debt cancellation and a new loan forgiveness rule for borrowers defrauded by their colleges.
Republican attorneys general secured an injunction in October barring the Biden administration from implementing the debt relief regulation, an alternative to the plan the Supreme Court struck down in 2023, amid ongoing litigation. If the regulation is deemed illegal, there is no indication the Trump administration would do anything to rescue it. The president-elect has expressed disdain for Biden's debt cancellation efforts, calling them "vile" at a rally in Wisconsin this summer.
The Trump administration could also sit back and let the courts strike down Biden’s update to the borrower defense to repayment rules, which clears the debts of students whose colleges used illegal or deceptive tactics to persuade them to borrow. The Court of Appeals for the Fifth Circuit put the rules on ice in April, siding with Career Colleges and Schools of Texas, which the court said was likely to succeed in proving the Education Department exceeded its authority with the regulation.
“If the administration doesn’t defend these programs, there will be fewer ways for people who are really struggling with debt … to break free of the debt and get from under that burden,” Shafroth said.
The Trump administration could also take a more difficult path to overturn several student loan policies - by rescinding Biden's recent regulatory updates. That would affect the most recent borrower defense rules as well as updates to the closed school discharge and Public Service Loan Forgiveness programs. The programs would remain on the books but revert to the old terms unless the new administration attempts to rewrite them.
While the Trump administration has yet to release its agenda for federal financial aid, congressional Republicans have a playbook — the College Cost Reduction Act. The legislation, sponsored by Representative Virginia Foxx, a North Carolina Republican, failed to get a floor vote this year but could be revived and passed with a Republican majority in both chambers.
Among its many provisions, the bill would end Plus loan programs for graduate students and parents and restrict the amount of federal loans a student can take out. It would also prevent interest capitalization, sunset income-driven plans, and require students to pay back only what they would have owed on a 10-year standard repayment plan.
By some estimates, the plan would increase student loan payments and leave some indebted for the rest of their lives. Others argue the legislation could bring about much-needed streamlining of the unwieldy student loan system.