The looming threat of potential rollbacks to President Joe Biden's student loan relief efforts has left millions of borrowers on edge. With Donald Trump soon taking office, many are bracing themselves for significant changes to the policies aimed at alleviating the burdens of student debt.
Since Biden assumed the presidency, he has pushed various initiatives aimed at easing the weight of student debt for millions of Americans. His administration's aggressive approach included forgiving loans for specific groups, such as those working in public service or those who had been defrauded by their colleges. By the end of his term, over 5 million borrowers had seen about $175 billion in debt relief, making it one of the most expansive student loan forgiveness efforts seen.
Unfortunately for these borrowers, the Biden administration has faced numerous legal challenges, with recent court rulings throwing many of these relief measures—and the borrowers relying on them—into disarray. A federal judge blocked Biden’s second attempt at mass debt cancellation after his first effort met the same fate at the Supreme Court. The situation has compounded confusion for borrowers, particularly as the Education Department has had to halt repayments and loan forgiveness processing.
Now, as the Trump administration prepares to take the reins, discussions among Trump’s transition team suggest swift actions against these Biden-era policies. According to sources familiar with the talks, advisors are brainstorming ways to repeal the student loan forgiveness initiatives, which they've labeled as “vile” and “illegal”. The aim is to reverse the easier paths to loan forgiveness established under Biden, impacting countless individuals who had pinned their hopes on these relief programs.
Trump transition advisers have been particularly focused on addressing the SAVE Plan, which caps monthly payments at 5% of income for undergraduate borrowers. Under this plan, which many borrowers were utilizing before the injunctions began, payments were suspended along with interest accumulation. Approximately 8 million borrowers were enrolled when the plan was frozen earlier this fall.
Shifting these borrowers away from the suspended SAVE Plan and transitioning them to different repayment plans presents both legal and operational challenges. Scott Buchanan, head of the Student Loan Servicing Alliance, highlighted the complexity of the impending changes: “It’s not just flipping a switch to undo everything,” he noted. “There’s significant coding and technical work needed.”
Linda McMahon, nominated to lead the Department of Education, has been vocal about her opposition to Biden's policies. The America First Policy Institute, which she chairs, has branded Biden’s reforms as “unlawful” and “deeply unfair.” Under her leadership, it is expected the Trump administration will take swift measures to dismantle many of Biden's initiatives. Jonathan Pidluzny, the institute's director for higher education issues, is assisting the transition team on formulating new policies, which may substantiate the rollback of the current borrowing measures.
While Trump plans to dismantle Biden’s significant efforts, he may also need to confront the reality of the current student loan portfolio, which stands at about $1.6 trillion. Millions who were counting on debt relief could face renewed pressures to resume payments as the Education Department prepares to restart the collection of defaulted loans—a process paused since the onset of the COVID-19 pandemic.
Despite these official changes hanging overhead, borrowers are advised to navigate the current financial environment cautiously. Adam Minsky, attorney specializing in student loan law, noted how borrowers remain trapped amid the institutional confusion, stating, “Making the wrong move now could lead to higher payments or additional processing delays.”
While some may contemplate returning to earlier repayment plans, improvements made through the SAVE Plan ensured more manageable payments for many borrowers. The prospect of reverting to older, less favorable options could significantly exacerbate financial strains for those already facing significant loan debts.
An alarming reality facing borrowers is the possibility of backtracking both progress toward forgiveness and the enhancements made to restructuring debts under previous plans. The fallout from Trump’s potential policies pits voters against each other, especially those favoring cancellation versus those who oppose government spending on education reforms.
The situation shows no signs of stabilizing, as the ideal solutions for both sides remain muddled. Several analysts suggest the level of chaos affecting borrowers is unprecedented. "You really can’t overstate the mess this administration is inheriting," said Michael Brickman, who served as senior Education Department official earlier, admitting the inherited chaos will demand substantial efforts to rectify.
Republican opposition to extensive student loans relief has been evident for over four years, reaching its peak as Trump rallied his supporters against what he termed Biden's “catastrophe” of student loans. The notion of preparing to dismantle these initiatives incites significant worry among borrowers, particularly with many contending with already inflated living costs alongside their educational debts.
And just as worry and confusion merge among potential borrowers, some efforts may remain actively reachable for those who have actively pursued loan forgiveness under available routes set out by Biden’s administration. Those pursuing forgiveness through Public Service Loan Forgiveness (PSLF) still have pathways available amid the maelstrom, even though processing points have slowed due to administrative crossover challenges.
The Trump administration plans may roll back these energies and create uncertainties on the ability to secure future economic mobility based on educational success. While it remains clear his administration will differ markedly from Biden’s approach, the bottom line hangs heavy: millions of Americans have placed their financial futures at the mercy of upcoming decisions. The aftermath of Biden's policies and their potential undoing sits precariously on the horizon as the Trump team prepares to influence the next phase of federal financial support for education.
