If Donald Trump is re-elected as president, federal student loan forgiveness programs may be at risk. He would likely eliminate the opportunity for students to receive debt forgiveness and reduced payment amounts, by repealing or altering Biden’s initiatives.
SAVE Student Loan Plan
The Saving on a Valuable Education plan, also known as the SAVE plan, is an income-driven repayment plan brought in by the White House in August 2023. Further elements of the plan were scheduled to be brought in this month, some of which have been blocked by the courts.
Under the SAVE plan, students will be eligible for student loan forgiveness upon meeting specified criteria.
Trump’s decision to cancel forgiveness of student loans
During a recent campaign rally in Racine, Wisconsin, Donald Trump criticized President Joe Biden’s student loan forgiveness plans, calling them “vile.”
He has repeatedly commended the Supreme Court’s June 2023 ruling invalidating Biden’s attempt to eliminate up to $400 billion in student loans. This effort would have forgiven up to $20,000 for Pell Grant recipients and a maximum of $10,000 for borrowers earning less than $125,000 annually.
“He did that with the tuition and that didn’t work out too well, he got rebuked,” Trump said. “Then he did it again, it’s going to get rebuked again, even more so, it’s an even more vile attack, but he did that with tuition just to get publicity with the election,” he added.
During his tenure as president, Donald Trump proposed eliminating the U.S. Department of Education’s current loan relief programs. He also made efforts to reduce the department’s budget and his administration stopped a regulation intended to provide loan forgiveness to individuals who were defrauded by their educational institutions.
As he seeks reelection, Trump seems prepared to further reduce financial aid programs for students. He has attacked Biden’s loan relief policies repeatedly and clearly stated his intentions to close the Education Department altogether.
How would it affect borrowers if forgiveness is canceled
Project 2025, a broad policy document that Trump has somewhat distanced himself from, but which many believe he is at least somewhat favorable towards, proposes that student loans and grants should ultimately return to the control of private entities. The project also proposes scaling back affordable repayment options for borrowers and terminating the loan forgiveness currently available under these programs after a specific timeframe.
Many experts in higher education and advocates have raised alarms about the potential impact of the proposals.
The cancellation of forgiveness would result in the termination of interest rate subsidies or loan forgiveness for borrowers on income-driven repayment plans. This will greatly affect college affordability, especially for low-income and minority communities for fear of having too much debt. It would also increase financial hardship for individuals who are already struggling to repay their loans.
In a statement made by the higher education expert Mark Kantrowitz, “Trump will undo President Biden’s student loan forgiveness proposals,” “He will relax rules on for-profit colleges, as part of deregulation efforts, and propose cuts, including possibly defunding the U.S. Department of Education.” He added.
During the previous administration of the former president, a backlog of applications to the Education Department’s Public Service Loan Forgiveness (PSLF) program piled up unattended. Trump also worked to weaken protections for students who’d been defrauded by higher education institutions.
If Trump comes back to serve a second term, there could be a total elimination of student loan forgiveness with severe consequences for many struggling with student debt.
