What’s at stake for student loan borrowers during the next Trump administration

By Katie Lobosco, CNN

Washington (CNN) — With much of President Joe Biden’s student loan agenda tied up in court, the incoming Trump administration could have a significant impact on millions of borrowers.

President-elect Donald Trump hasn’t made specific promises on student loans or other forms of college financial aid, but delivering student loan forgiveness isn’t a policy priority like it has been for Biden.

Republicans have repeatedly challenged Biden’s efforts, and when his sweeping student loan forgiveness program was struck down by the Supreme Court last year, Trump said the proposal “would have been very unfair to the millions and millions of people who have paid their debt through hard work and diligence.”

During his first term, Trump proposed ending a program that delivers student loan forgiveness to public sector workers after 10 years, and his administration tried to limit debt relief for borrowers who were misled by their colleges. Both efforts were unsuccessful, but the latter left many people waiting for years to find out if their debt-relief claim would be granted.

It’s possible for the Trump administration to unilaterally make some changes to the federal student loan system through a rulemaking process, but other actions – like abolishing the Department of Education, as Trump has promised to do – would require Congress to act.

Here’s what student loan borrowers need to know about what’s at stake and what Trump could do:

Biden’s SAVE repayment plan

One of the first things Trump’s Department of Education may have to address is what to do with Biden’s SAVE (Saving on a Valuable Education) repayment plan, which is currently on hold due to litigation.

There are 8 million people enrolled in SAVE, and if it is struck down in court, they will have to move into a different repayment plan.

A lawsuit brought by several Republican-led states argues that the president doesn’t have the authority to implement the plan. A ruling by the 8th US Circuit Court of Appeals is expected imminently.

The Trump administration could decide to rescind the repayment plan, which was created by a regulatory process. It could also decide to stop defending the plan in court.

SAVE, which was launched last year, is meant to offer the most generous terms for low-income borrowers. Under the plan, some enrolled borrowers would see monthly payments as low as 5% of discretionary income. It also promises to cancel remaining student loan debt after making as little as 10 years of payments.

Borrowers enrolled in SAVE are not currently required to make payments since the Department of Education put them in an interest-free forbearance due to the litigation. The department is expected to reopen two older income-driven repayment plans in December, giving borrowers the option to switch into a plan that might be more affordable than the standard, 10-year plan.

Income-driven repayment plans calculate a borrower’s monthly payment based on their income and family size, rather than the amount of debt they owe. In addition to lowering monthly payments, the plans promise to wipe away remaining student debt after a borrower makes a certain number of payments – usually 20 or 25 years’ worth.

Project 2025, the conservative blueprint published by the Heritage Foundation, calls for creating one new income-driven repayment plan and eliminating all the others. The policy paper also favors eliminating any loan forgiveness provision in the repayment plan – but this would likely require an act of Congress.

Trump has distanced himself from the 900-page playbook, but a CNN review found that at least 140 people who worked in the first Trump administration were involved.

Biden’s $175 billion of student loan forgiveness

The Biden administration has canceled a record $175 billion of student loan debt for nearly 5 million people – largely through existing relief programs for public sector workers, disabled borrowers and people who were misled by their college.

Under Biden, the Department of Education temporarily expanded eligibility for the Public Service Loan Forgiveness program, recounted past payments to correct administrative errors, cut red tape for disabled borrowers and chipped away at a backlog of relief applications left over from the previous Trump administration.

Trump has not suggested that clawing back student loan forgiveness that was already granted is on his to-do list for his second term. It could be difficult both politically and logistically.

Efforts to reverse student debt relief would be expected to face legal challenges.

“If the new Trump administration attempts to reinstate discharged loans by reversing legal positions, they will be held accountable and spend much of the next four years tied up in court,” said Aaron Ament, president of the nonprofit National Student Legal Defense Network.

There are some borrowers who may have been notified by the Department of Education that they have been granted debt relief, but they have yet to see the change made to their account balance. Even in that situation, there is precedent that the forgiveness would still take effect under a new administration.

“We don’t think that can be clawed back under the law. We don’t think it should be clawed back, of course, but we’re ready to defend those discharges,” said Eileen Connor, president and director of the Project on Predatory Student Lending, which represents borrowers defrauded by their colleges.

Biden has made other efforts to create new programs to deliver student loan forgiveness, but none of them are currently in effect. His signature student loan forgiveness program, which would have delivered up to $20,000 of relief to millions of borrowers, was struck down by the Supreme Court last year.

Since then, his Education Department has been working on implementing more targeted debt-relief programs through the regulatory process. But those proposals have not been finalized, and Trump’s new administration could decide not to move forward with implementing them. One proposal, which would cancel interest for some student loan borrowers, is already facing a Republican-led lawsuit.

Trump’s earlier actions on student loans

During Trump’s first term, he made some unsuccessful efforts to make it harder for some people to qualify for student loan forgiveness through two existing programs. His Education Secretary Betsy DeVos and many other Republicans argued against some debt relief because it transfers the cost to taxpayers, many of whom didn’t go to college.

Public Service Loan Forgiveness program: PSLF was created during President George W. Bush’s administration in 2007. It cancels remaining student loan debt after a qualifying public sector worker makes 10 years’ worth of payments.

During his first term, Trump called for phasing out PSLF. But since the program was created by Congress, it would have to be dissolved by Congress – and that move did not receive support in the past.

Trump’s proposal would have eliminated the program for new borrowers only.

Borrower defense to repayment: Trump’s first administration made attempts to limit the borrower defense to repayment program, which grants debt relief to people who were misled by their college.

DeVos tried to change the rule so that eligible borrowers would receive partial relief, instead of canceling the full amount of debt. She made it clear that she thought the rule was “bad policy” that put taxpayers on the hook for the cost of the debt relief without the right safeguards in place and made changes to limit its reach.

The proposal was unsuccessful, but the department stopped processing borrower defense claims while fighting challenges in court. As a result, a backlog of more than 200,000 claims piled up. DeVos and the department were later found in contempt of court for continuing to collect on some of those loans while the rule was pending.

The Biden administration has worked to chip away at that backlog.

Call to abolish the Department of Education

Trump has called for closing the Department of Education, which currently administers the $1.6 trillion federal student loan portfolio.

First of all, Trump will need Congress to do away with the department – and it’s unclear if he will have the support from enough lawmakers to do so. Trump’s first administration proposed merging the Education and Labor departments, but the idea didn’t go anywhere despite Republicans having control of both the House of Representatives and Senate at the time.

It’s possible that some programs and funding could be retained and shifted to other agencies, which is where they were housed before the department was created in 1979.

If that happens, Project 2025 recommends moving the federal student loan portfolio to the Department of Treasury.

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