This student loan relief may be most at risk under the Trump administration, experts say

With President Donald Trump back in the White House and Republicans in control of Congress, experts worry that a number of student loan programs may now be in jeopardy.

At-risk programs include the U.S. Department of Education’s new repayment option for borrowers — called the Saving on a Valuable Education, or SAVE, plan — and the Biden administration’s more lenient bankruptcy policy.

Meanwhile, House Budget Committee Republicans are floating proposals that would reduce or eliminate more student loan programs, including the Biden administration-era rules that made it easier for borrowers to get debt relief when they’re defrauded by their schools, Politico reported last week.

Consumer advocates are worried for borrowers based on Trump’s comments about student loan relief on the campaign trail. At one rally, he called the Biden administration’s debt forgiveness efforts “vile” and “not even legal.”

The White House did not immediately respond to a request for comment.

More than 40 million Americans carry federal student loans, and the outstanding debt exceeds $1.6 trillion, according to higher education expert Mark Kantrowitz.

Here are the programs experts think are most at risk under the Trump administration.

When SAVE launched in 2023, the Biden administration called its new repayment plan for federal student loan borrowers “the most affordable student loan plan ever.” SAVE cut many borrowers’ monthly bills in half and shortened the timeline to loan forgiveness for those with smaller balances.

It quickly proved popular. To that point, around 8 million borrowers signed up for the new income-driven repayment, or IDR, plan, the White House had said.

But the plan also quickly ran into legal troubles.

Republican attorneys general in Kansas and Missouri, who led the legal challenges against SAVE, argued that President Joe Biden was essentially trying to find a roundabout way to forgive student debt after the Supreme Court blocked its sweeping debt cancellation plan in June 2023. Due to those legal actions, the plan has been on hold since last year.

More from Personal Finance:
Here’s the inflation breakdown for December 2024 — in one chart
Worried about Social Security’s future? What to consider before claiming benefits
Here’s who qualifies for Biden’s $4.2 billion in student loan forgiveness

The plan is unlikely to survive a second Trump term, Kantrowitz said.

“There are several methods the Trump administration could use to kill the SAVE repayment plan,” he said. “They could abandon the defense of the repayment plan in the pending lawsuits.”

“They could issue new regulations to revoke the repayment plan,” or Congress could pass a law to do away with the plan, Kantrowitz added.

Currently, SAVE enrollees are excused from making payments while the plan is tied up in the courts. That reprieve may soon end, too, experts said.

For decades, student loan borrowers found it next to impossible to walk away from their federal student debt in bankruptcy. The Biden administration changed that.

In the fall of 2022, the Department of Education and the Department of Justice jointly released updated bankruptcy guidelines to make the bankruptcy process for student loan borrowers less arduous. The Biden administration’s updated policy treated student loans like other types of debt in bankruptcy court, experts said.

Trump is likely to rescind that guidance, Kantrowitz said.

“There may be more of a scorched earth approach to opposing all attempts to discharge federal student loans in bankruptcy,” he said.

However, Malissa Giles, a consumer bankruptcy attorney in Virginia, said she was hopeful that the guidance will remain in place.

Still, her concern is that many jurisdictions will have new assistant U.S. attorneys, “and we may see a shift in the approach based on changing politics and pressures of more Republican-aligned U.S. attorneys.”

For now, Giles said she was being more conservative in what student loan bankruptcy cases she took on.

Among the recent ideas floated by House Budget Committee Republicans is the partial repeal of the Biden administration’s Borrower Defense regulations, which made it easier for borrowers to get their debt excused when their school engaged in misconduct.

The GOP members are also reviewing reforms to Public Service Loan Forgiveness, including the possibility of “limiting eligibility for the program,” according to the document obtained by Politico.

They’re also considering eliminating the student loan interest deduction. That tax break allows qualifying borrowers to deduct up to $2,500 a year in interest paid on eligible private or federal education debt. Before the Covid pandemic, nearly 13 million taxpayers took advantage of the deduction, according to Kantrowitz.