Is Trump's Second Term Going To Affect Student Loan Borrowers? Here Are 3 Potential Changes

Student loan policies could be overhauled under President-elect Donald Trump’s upcoming administration, with several existing programs likely to undergo changes or be eliminated.

The Biden administration’s Saving on a Valuable Education (SAVE) repayment plan, currently serving eight million borrowers, stands at a crossroads. The program’s fate hangs in the balance as the 8th Circuit Court of Appeals weighs its legality, with no clear indication that Trump’s administration would continue defending it.

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“The reason [the Biden] administration is defending the rule so vigorously is it was providing a much more affordable repayment plan,” Persis Yu, deputy executive director at Student Borrower Protection Center, told CNBC Make It last week.

Trump’s previous term offers insights into potential policy directions.

According to CNBC, his administration proposed eliminating Public Service Loan Forgiveness and slashed funding for various higher education programs. During that period, roughly 99% of PSLF applicants faced rejection by 2019, leading to legal action from teachers’ unions against then-Secretary of Education Betsy DeVos.

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The administration’s approach to borrower protections also shifted. Rules were loosened for institutions to demonstrate student success outcomes, resulting in an estimated $11 billion reduction in debt relief for borrowers affected by questionable academic programs, particularly at for-profit colleges.

Project 2025, a policy agenda developed by The Heritage Foundation, outlines more dramatic changes. While Trump has distanced himself from the proposals, the agenda calls for eliminating PSLF and borrower defense programs. More importantly, it proposes dismantling the Department of Education and returning to private lender dominance in education financing.

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The shift toward private lending raises concerns among borrower advocates. “What kind of corporate interests are going to be protected over the interests of borrowers and students,” Yu said to CNBC. Private student loans typically carry higher costs as lenders set interest rates independently, unlike federal loans, where Congress determines rates.

The transition could leave millions of borrowers in limbo regarding their monthly payments. Biden’s alternative debt relief plan, targeting long-term borrowers and those from low-value academic programs, faces legal challenges that the Trump administration appears unlikely to defend against Republican-led lawsuits.

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The landscape marks a pivot from March 2020, when Trump initiated the pandemic-related payment pause. That policy lasted throughout his term and provided widespread relief to federal loan borrowers.

His return to office signals a potentially different approach to student debt management, emphasizing private sector solutions over federal programs.

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