What Donald Trump’s Win Could Mean for Student Loan Forgiveness

One focus of President Joe Biden’s administration was to provide student loan forgiveness to millions of borrowers across the country, but now that President-elect Donald Trump is reentering the White House after Tuesday’s election, all bets could be off for debt forgiveness.
During Biden’s administration, the Education Department provided $175 billion in student loan forgiveness for roughly 5 million people.
The Biden administration moved ahead with a third attempt at broad student loan cancellation last month, focused on helping Americans who face medical bills, child care costs and other types of financial hardship that prevent them from repaying their loans. Biden’s first plan, to wipe away up to $20,000 in debt for more than 40 million Americans, was blocked by the U.S. Supreme Court last year, and his second plan has been put on hold by a federal judge.
While it’s still unclear if there’s any alternative plan for student loan forgiveness under a second Trump administration, Trump has made it clear he was against Biden’s attempts to forgive student loans over the years.
During his debate against Vice President Kamala Harris, the Democratic nominee, in September, Trump attacked Biden and Harris for failing to deliver on their promise to cancel student loans. Trump called the administration’s initial plan for widespread student debt cancellation a “total catastrophe” and said it would have been “unfair” to the millions of Americans who did repay their loans.
“With courts already taking a second look at the legalities behind current forgiveness efforts, it’s fair to assume existing programs are in danger of being eliminated, and future efforts to forgive student loans are more than likely going to be non-existent,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “The reality for borrowers who hoped to qualify is they need to start outlining alternative strategies to paying down the debt or hope the Trump administration has a change of heart on the subject.”
During Trump’s first term, his administration pushed for monthly payments to increase from 10 to 12.5 percent of borrowers’ discretionary income and also wanted to merge all income-driven repayment plans into one simplified option.
“That 2.5 percent increase would hit many borrowers’ wallets hard,” Michael Ryan, a finance expert and the founder of michaelryanmoney.com, told Newsweek. “Trump’s been crystal clear about his opposition to broad loan forgiveness.”
Generally, student loan forgiveness during the first Trump administration was limited to programs allowed under the existing Higher Education Act (HEA) of 1965 and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
“Given the legal challenges that have taken place since Biden became President and began promoting new forgiveness programs, I don’t see President-elect Trump promoting any new forgiveness plans,” Jack Wallace, head of government of affairs for student loan refinancing platform Yrefy, told Newsweek. “Unless the new Congress reauthorizes the HEA Act and provides for a new form of forgiveness, nothing other than the current forgiveness programs will be available to federal student loan borrowers.”
Newsweek has reached out to Trump for comment via email.
Biden’s current SAVE income repayment plan currently rests on the chopping block as it continues to face legal challenges.
With Trump in office, it’s likely his administration would push to dismantle the SAVE plan and potentially legally challenge the remaining forgiveness plans in place, Ryan said.
“He got rebuked, and then he did it again,” Trump said about Biden’s first student loan forgiveness plan getting struck down by the Supreme Court earlier this year. “It’s going to get rebuked again, even more.”
Due to this, borrowers should start expecting higher monthly payments and look to fast-track their paperwork if they’re counting on the Public Service Loan Forgiveness program, according to Ryan.
Trump, meanwhile, may have a special interest in blocking many of the forgiveness options as well, one expert says.
“I believe that Trump may dismiss Biden’s student loan forgiveness program, partly due to his own entanglement with educational controversies through Trump University,” Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek. “His school was among those accused of exploiting government funding to offer low-value degrees to unsuspecting students. Given Trump’s past statements and judgments in favor of for-profit schools, he may view these institutions as part of a capitalist system working for the public good.”
Trump University was a for-profit education program claiming to teach real estate practices and was later subjected to multiple lawsuits alleging deceptive and aggressive marketing practices. Following a legal battle, Trump settled the suits for a total of $25 million.