How 5 Student Loan Forgiveness Programs Could Change Under Trump

With former President Donald Trump now set to return to the White House following his election victory this week, the fate of several student loan forgiveness programs is murky. But there will very likely be significant changes to the student loan landscape during the next four years.

One thing seems nearly certain — the Biden administration’s initiatives to cancel student loan debt on a mass scale will not proceed further. Biden’s “Plan B” loan forgiveness initiative is currently blocked by a federal court in Missouri and wouldn’t be implemented under the Trump administration. And a Trump-led Education Department would be highly unlikely to move forward with the Biden administration’s plans to create a student loan forgiveness path based on hardship.

But the future of several other existing student loan relief programs may diverge, depending on a variety of factors including how aggressive the Trump administation’s repeal efforts are, and whether Republicans can cobble together sufficient majorities in Congress to enact more sweeping changes.

Lower Payments And Student Loan Forgiveness Under SAVE Plan Likely Ends

The SAVE plan is almost certainly dead in the water, and the Trump administration may not even have to do much of anything for that to happen.

SAVE is a new income-driven repayment plan that the Biden administration rolled out last year. The program reduces borrowers’ monthly payments, eliminates excess interest accrual to prevent runaway balance growth, and establishes multiple timelines for eventual student loan forgiveness. But a group of Republican-led states filed legal challenges last spring. In August, the 8th Circuit Court of Appeals issued a nationwide injunction blocking the program while the litigation continued.

The Trump administration could repeal SAVE through the regulatory process. But this may not be necessary. Last month at a key court hearing, the 8th Circuit panel seemed inclined to strike down the SAVE plan. If that happens, the Trump administration could simply choose not to appeal that ruling to the Supreme Court, allowing the 8th Circuit’s decision to stand. A ruling could be issued at any time.

Depending on the scope of the 8th Circuit’s decision, student loan forgiveness under several other IDR plans — including the Pay-As-You-Earn plan and Income-Contingent Repayment, or ICR, could also be struck down.

Student Loan Forgiveness Under Income-Based Repayment Intact, For Now

In the August ruling, the 8th Circuit pointed out that student loan forgiveness under Income-Based Repayment, a separate IDR plan, is not in legal jeopardy. That’s because Congress established IBR through separate legislation, expressly authorizing loan forgiveness after 20 or 25 years.

The Trump administration would have limited tools to eradicate IBR through executive action alone. The administration could put up barriers to relief, such as reducing oversight and accountability for loan servicers, or making it difficult for borrowers to obtain relief through IBR due to funding or staffing reductions that result in delayed processing. But legally, IBR is more firmly rooted in federal law than the SAVE plan, which was established through a regulatory process without Congress’s involvement (the Biden administration argues that Congress effectively authorized plans like SAVE through legislation passed in 1993, but the 8th Circuit seems poised to reject those arguments).

It would ultimately take an act of Congress to repeal the IBR plan. This is a possibility, as Republicans are projected to win control of the Senate and appear to be on track to win a slim majority in the House of Representatives. But it may be difficult to repeal IBR even with full Republican control of Washington, particularly if lawmakers can’t get around the Senate filibuster, which requires 60 votes. If Republicans do manage to pass legislation repealing IBR, they would likely create some sort of alternative income-driven repayment plan option, but may eliminate loan forgiveness as a feature of the program.

Public Service Loan Forgiveness Could Face Changes Or Repeal

Like IBR, the PSLF program was established through legislation passed by Congress, so it can’t simply be eliminated through executive action. The 8th Circuit, in its August order, argued that the two programs are distinct from a program like the SAVE plan, which was created solely through regulations established by the Department of Education.

But regulations are subject to changes or repeals, and the Biden administration recently issued some new PSLF regulations that could be in danger. These new rules, which went into effect just last year, provide a number of new benefits for PSLF borrowers:

• PSLF Buyback, a new program that allows borrowers to make a lump sum payment to get credit for certain prior non-qualifying deferment or forbearance periods so that they count toward loan forgiveness;
• Simplified definitions of qualifying PSLF employment;
• An expansion of qualifying PSLF employment to include certain contractors and adjunct faculty;
• An expansion of qualifying PSLF payments to include certain deferment and forbearance periods, including for those servicing in the Peace Corps, AmeriCorps, and the military.

The Trump administration would have to initiate a formal regulatory process to change or repeal these PSLF programs, which would take a year or two.

But the PSLF program itself, allowing for borrowers to receive student loan forgiveness after the equivalent of 10 years of qualifying payments and qualifying nonprofit or public employment, should remain intact unless Congress passes new legislation to repeal the program.

As with IBR, this could happen if Republicans control all branches of government. But a repeal of PSLF would face the same challenges as a repeal of IBR, so while PSLF could be eliminated, it’s not necessarily a guaranteed outcome. And if a repeal does happen, there may be a push from some quarters to repeal PSLF only for new enrollees (the prior Trump administration did propose that as part of a broad budget plan in 2020).

Student Loan Forgiveness Through Borrower Defense To Repayment

The Borrower Defense to Repayment program has long been subject to fierce political and legal battles. This program allows borrowers to apply for a discharge of their federal student debt if their school made misrepresentations or false promises about key aspects of the degree or certificate program such as admissions selectivity, accreditation, or career and earnings prospects.

There are multiple versions of Borrower Defense regulations. The Obama administration first passed regulations and established a formal Borrower Defense application process in 2016. Then in 2019, the Trump administration passed new rules that dramatically curtailed relief under the program, and increased the burden of proof borrowers had to meet to qualify for any student loan forgiveness. In 2023, the Biden administration passed yet another set of rules designed to be far more borrower-friendly and to replace the Trump-era regulations.

But at this time, the 2023 regulations remain tied up in a legal battle at the 5th Circuit Court of Appeals. In a recent ruling, the court suggested there is a likelihood that these Biden-era rules will get struck down. If that’s the case, just like with the SAVE plan, the Trump administration could simply decline to appeal that decision, allowing it to stand. This would effectively leave in place the 2019 regulations, making it much more difficult for borrowers to get student loan forgiveness under the program.

Student Loan Forgiveness For Medical Impairments

Unlike many other federal student loan relief programs, the Total and Permanent Disability discharge program has not been particularly controversial. The TPD Discharge program provides student loan forgiveness for borrowers who are unable to engage in substantial, gainful employment due to medical impairments.

Like IBR and PSLF, the TPD Discharge program was established by Congress, so it cannot simply be eliminated through executive action. It seems unlikely that a Republican-led Congress would repeal the TPD Discharge program. In fact, in 2017, a unified Republican Congress and President Trump signed legislation temporarily exempting student loan forgiveness under the TPD Discharge program from federal taxation — a provision that will be up for renewal next year.

It’s possible that the Trump administration could roll back recent regulations established by the Biden administration — most notably, an elimination of post-discharge income monitoring, which historically resulted in the reversal of many TPD discharges if the borrower failed to respond or earned more than a nominal income during the three years after getting approved for a discharge.