washington
CNN
—
Much of President Joe Biden’s student loan agenda is being challenged in court, and the incoming Trump administration could have a significant impact on millions of borrowers.
President-elect Donald Trump has not made any specific promises about student loans or other forms of college financial aid, but achieving student loan forgiveness is not a policy priority like Biden’s.
Republicans have repeatedly challenged Mr. Biden’s efforts, and when his sweeping student loan forgiveness program was struck down by the Supreme Court last year, Mr. Trump said the proposal was meant to help “people who worked hard and paid off their debt.” It would have been very unfair to millions of people.” And diligence. ”
During his first term, President Trump proposed ending a student loan forgiveness program for public sector employees after 10 years, and his administration sought to limit debt relief for borrowers misled by colleges. Both efforts failed, but the latter left many people waiting years to learn whether their debt forgiveness claims would be approved.
While the Trump administration could unilaterally make some changes to the federal student loan system through the rulemaking process, other measures, such as Trump’s promised elimination of the Department of Education, would require Congressional action. .
Here’s what student loan borrowers need to know about what’s at stake and what President Trump can do.
The first thing President Trump’s Education Department may have to deal with is what to do with Biden’s SAVE repayment plan, which is currently on hold due to litigation.
Eight million people are enrolled in SAVE, and if it is invalidated in court, they will have to move to another repayment plan.
Lawsuits filed by several Republican-led states argue that the president lacks the authority to carry out the plan. A decision by the 8th U.S. Circuit Court of Appeals is expected soon.
The Trump administration may decide to cancel repayment plans established through the regulatory process. It may also decide to stop defending the plan in court.
SAVE, launched last year, aims to offer the most generous terms to low-income borrowers. Under this plan, some enrolled borrowers can expect their monthly payments to be: It’s about 5% of disposable income. It also promises to cancel remaining student loan debt after at least 10 years of payments.
Borrowers enrolled in SAVE do not currently have to make payments due to the Department of Education’s interest-free moratorium due to the lawsuit. The department plans to restart two older income-driven repayment plans in December, giving borrowers the option to switch to a more affordable plan than the standard 10-year plan.
Income-based repayment plans calculate a borrower’s monthly payments based on their income and family size, rather than how much they owe. In addition to lowering monthly payments, the plan promises to wipe out any remaining student loans after a borrower makes a certain number of payments, usually the equivalent of 20 or 25 years.
The Heritage Foundation’s conservative blueprint, Project 2025, calls for creating one new income-driven repayment plan and eliminating all others. The policy document also supports removing loan forgiveness clauses from repayment plans, although this is likely to require a vote in parliament.
Although President Trump has distanced himself from the 900-page playbook, a CNN investigation found that at least 140 people who worked in the first Trump administration were involved.
The Biden administration is It canceled a record $175 billion in student loan debt for nearly 5 million people, primarily through existing relief programs for public sector employees, disabled borrowers, and people misled by colleges.
Under the Biden administration, the Department of Education temporarily expanded eligibility. The Public Service Loan Forgiveness Program will recount past payments to correct administrative errors, eliminate red tape for disabled borrowers, and close the backlog of relief applications left by the former Trump administration. I reduced it little by little.
President Trump has not indicated that restoring student loan forgiveness, which has already been granted, is on his to-do list for a second term. This could prove politically and logistically difficult.
Efforts to cancel student loan forgiveness are expected to face legal challenges.
“If the new Trump administration attempts to reverse the legal position and reinstate forgivable loans, they will be held accountable and spend the better part of the next four years in court.” said Aaron Ament, president of the for-profit National Student Legal Defense Network.
Some borrowers may have received notification from the Department of Education that they have been granted debt forgiveness, but have not yet seen any change in their account balances. Even in such situations, there is precedent for pardons to be effective even under the new administration.
“We believe this cannot be reversed under the law. Of course we do not think it should be reversed, but we are prepared to defend these discharges. ” said Eileen Connor, Chairman and Director. A project on predatory student lending representing borrowers who were defrauded by their universities.
Biden has also made other efforts to create new programs for student loan forgiveness, but none are currently in place. His signature student loan forgiveness program, which would have given millions of borrowers up to $20,000 in relief, was struck down by the Supreme Court last year.
Since then, his Education Department has worked to implement a more targeted debt relief program through the regulatory process. However, these proposals have not yet been finalized, and the new Trump administration may decide not to proceed with their implementation. One proposal to cancel interest for some student loan borrowers is already facing a Republican-led lawsuit.
During President Trump’s first term, efforts to make it harder for some people to qualify for student loan forgiveness through two existing programs failed. Education Secretary Betsy DeVos and many other Republicans argued against some debt relief, saying it would shift the cost to taxpayers, many of whom did not go to college.
Public Service Loan Forgiveness Program: PSLF was established in 2007 during the administration of President George W. Bush. Eligible public sector employees can cancel remaining student loan debt after 10 years of repayments.
During his first term, Trump advocated phasing out PSLF. But because this program was created by Congress, it must be disbanded by Congress. And that move has not been popular in the past.
Trump’s proposal would eliminate the program, which was only available to new borrowers.
Borrower’s defense against repayment: The first Trump administration tried to limit debtor defense to repayment programs that provided debt relief to people who were misled by college.
Ms. DeVos sought to change the rules to allow eligible borrowers to receive partial relief rather than having their entire debt canceled. He said he believed the rule was “bad policy” that left taxpayers in the lurch with the cost of debt forgiveness without adequate safeguards, and that he had made changes to limit its scope.
The proposal failed, but the department stopped processing borrower defense claims while challenging it in court. As a result, a backlog of more than 200,000 claims has accumulated. DeVos and his department It was later found in contempt of court for continuing to collect on some of those loans while the rules were pending.
The Biden administration is We worked to gradually eliminate this backlog.
President Trump has called for shutting down the Department of Education, which currently manages the $1.6 trillion federal student loan portfolio.
First, Mr. Trump would need Congressional approval to abolish the department, and it is unclear whether he will have enough support from lawmakers to do so. The first Trump administration proposed merging the Departments of Education and Labor, but the idea never materialized despite opposition from Republicans. At the time, it controlled both the House of Representatives and the Senate.
Some programs and funding may be retained and transferred to other agencies where they were located before the department was established in 1979.
If that happens, Project 2025 recommends transferring the federal student loan portfolio to the Treasury Department.
