Sen. Elizabeth Warren (D-Mass.) criticized President Donald Trump’s plans to sell federal student loans to private companies, warning that the move could create windfall gains for Wall Street, at the expense of taxpayers and average working Americans.
A ‘Giveaway’ To Wealthy Insiders
On Tuesday, in a post on X, Warren argued that the administration’s proposed move “would be a giveaway to wealthy insiders,” which she said comes at the expense of “working class borrowers and taxpayers.”
This comes as the Trump administration weighs selling the federal government's $1.6 trillion student loan portfolio to private investors. Politico reported that officials from the Treasury and Education departments have held discussions with finance industry executives about the potential sale.
“It's a tremendous mistake,” Warren said, since such a sale would strip student loan borrowers of key protections, such as income-driven repayment plans and forgiveness programs.
Warren concluded her post by announcing her intent to fight against the proposal. In a bicameral letter to Secretary of Education Linda McMahon and Secretary of the Treasury Scott Bessent, Warren urged a pause on any such plans to transfer student loans to the “private, often predatory, market.”
The letter was signed by 40 Democratic lawmakers, including Warren, Sen. Bernie Sanders (I-Vt.) and Rep. Ayanna Pressley (D-MA), among others.
Loan Forgiveness Program Restored
Last month, the Trump administration agreed to resume student loan forgiveness following a settlement with the American Federation of Teachers, in a move that benefits more than 2.5 million borrowers. This comes following a legal standoff over the administration’s attempts to freeze certain income-driven repayment plans.
The settlement reactivates Income-Contingent Repayment and Pay As You Earn programs, which can now continue to operate until July 1, 2028.
Starting in 2026, Trump’s “One Big, Beautiful Bill” is expected to have a significant impact on the federal student loan landscape, especially the Parent PLUS loan program, which now comes with borrowing caps.
Compared to the old rules, which allowed parents to borrow the full cost of their child’s college attendance, the new policy caps borrowing to $20,000 per year and $65,000 per student.
The bill also includes changes to the accumulation of interest and repayment schedules, which, according to financial expert Suze Orman, are set to have major implications on American families.
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