The Trump administration is also currently undertaking a sweeping review of the federal student loan system, which could, in some cases, potentially affect repayment rules concerning millions of Americans. The $1.6 trillion system, now servicing about 42 million borrowers, could see standard changes very soon in repayment plans and loan forgiveness. Below are three areas with key changes that experts say are likely to be introduced under the proposed restructuring.
The SAVE program is likely to be discontinued
One of the most significant reforms may be an end to the SAVE plan, introduced in 2023 as an income-driven repayment option with favorable terms in the eyes of the borrowers, during the Biden era. Some 8 million borrowers are said to have been enrolled, which means the SAVE program with lower monthly payments and quicker forgiveness for borrowers with lower balances.
Yet legal obstacles beset it, chiefly from Republican-led states’ litigation. In February, a U.S. appeals court already blocked SAVE, saying it was an effort to implement wide debt relief after the Supreme Court killed off Biden’s larger cancellation plan back in mid-2023.
Experts say the Trump administration will not support the action in any way in court or change it to salvage it. Scott Buchanan of the Student Loan Servicing Alliance said, “It is hard to see any scenario where SAVE will survive.”
Many borrowers under SAVE are currently in the interest-free period of forbearance. That protection is thought to end soon, with borrowers expected to move into repayment plans other than SAVE, most of which are less generous.
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Cancellation of loans under the other IDR plans may be terminated
The Trump administration now revises IDR options beyond SAVE. Historically, plans like Pay As You Earn (PAYE), Income-Contingent Repayment (ICR), and Income-Based Repayment (IBR) allowed actual loan forgiveness after 20 to 25 years of repayment.
Under current updates, a curtailment or loss of forgiveness opportunity has been put into place for PAYE and ICR, according to Scott Buchanan. Concerns related to the legal pronouncements in the SAVE court ruling are believed to have entered into this more sweeping rollback.
The experts believe that these changes could be institutionalized by Trump’s Department of Education, thus further narrowing the path toward cancellation for borrowers whose balances remain on their loans. While borrowers still can switch to IBR, the PAYE or ICR payments they made could count toward forgiveness under IBR if they are eligible, said Mark Kantrowitz, a higher education expert. This might not be a bad bet for borrowers pursuing long-term relief, even with increased monthly payments.
Stricter public service loan forgiveness rules
Public Service Loan Forgiveness (PSLF) is also facing much skepticism. Established in 2007, PSLF allows government and non-profit employees to cancel their student loans after ten years of qualifying payments.
But a new executive order from President Trump narrowed it down to who may qualify. Employees of some organizations specifically involved in activities such as “illegal immigration, human smuggling, child trafficking,” among many vaguely defined activities, could get disqualified from access to PSLF.
The order’s wording is quite vague, and no formal list of the organizations with such disqualifications was ever released. Still, it raises red flags with a lot of nonprofits involved with immigration reform, LGBTQ issues, and racial equity—areas that the administration recently targeted.
Advocates say that PSLF has not been made to apply to prior eligibility concerns. Borrowers will continue to receive credit for previous service if their employer is disqualified later.
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