(NEXSTAR) – President-elect Donald Trump is returning to the White House after defeating Vice President Kamala Harris, but what will his second term mean for the millions of Americans with student loan debt?
Trump and his fellow Republicans have criticized Biden’s efforts at loan forgiveness in the past, saying it was “unfair” to the millions of students who have paid off their loans. Lawsuits from GOP-led states have also stalled plans for sweeping debt relief. However, Trump has not said what he would do in the event of loan forgiveness, leaving millions of borrowers facing uncertainty about their personal finances.
Trump has promised to complicate the situation even further Dissolution of the Ministry of Educationwhich monitors student loan policies.
Trump has publicly tried to distance himself from the Heritage Foundation Playbook for Project 2025 (despite Tap some who were involved in the writing), but if he changes his mind once he’s in office, the proposal calls for privatizing student loans and phasing out repayment programs, ultimately making it impossible for the government to provide debt relief.
Impact on the amount of student loan payments
President Biden’s signed Saving on a Valuable Education (SAVE) plan is in legal limbo following lawsuits from seven Republican attorneys general. If the means-tested program no longer exists under the next administration, payments for those enrolled could augment, to about 8 million by mid-2024.
SAVE bases monthly payments on income and family size and allows borrowers making less than 225% of the federal poverty level ($32,800) to make $0 payments. For other plans, this limit is 150% of the poverty level ($22,000). SAVE also prevents interest from accumulating as long as the adjusted monthly payment is made and limits the repayment period to 20 years for student loans and 25 years for college loans.
The plan is currently being heard in court an injunction In behind schedule October, repayments were placed on an interest-free pause for six months, pending further developments from the 8th Circuit Court of Appeals.
If borrowers are forced to choose an alternative repayment plan, monthly payments could augment significantly. In an example from the Department of Education, someone who earns $40,000 a year and has $45,000 in loan debt could see their payments augment from $60 to $151, $227 or $349 , depending on which plan he chooses Los Angeles Times.
Savannah Britt owes about $27,000 on loans she took out to attend college at Rutgers University. She hoped that President Biden would reduce this debt Student Loan Forgiveness efforts.
“With it recent administrationthe dream is gone. It’s crazy,” said Britt, 30, who runs her own communications agency. “I had hope before [Election Day]. I waited for the process to happen. Even my mother took a loan to support me. She owes about $18,000, and they were in the process of forgiving her debt, but it’s stalled.”
What is the Biden administration doing?
“Let’s make every day count,” President Biden said after Vice President Harris’ election loss.
Among the priorities the Biden administration is accelerating ahead of Inauguration Day are the following a recent federal rule This would forgive student loan debt for people who are struggling financially.
If passed, the proposal would authorize one-time debt relief for people who meet the hardship criteria after the Education Department conducts a “holistic assessment.” The second route to debt relief would be through a “prospective appraisal process” that would allow for forgiveness of loans that have “at least an 80 percent chance of becoming insolvent within the next two years.”
The rule, proposed by the Department of Education in behind schedule October, is currently in a public comment period that is scheduled to end on December 2nd. The Biden administration will then have a tight window to finalize the rule and put it into action, a process that typically takes several months.
As with previous debt relief efforts, this one will likely be challenged in court.
In addition, the Biden administration has room to expedite student loan cancellations for people who have already been promised relief because they were defrauded by their colleges, said Aaron Ament, an Obama administration Education Department official and president of National Student Legal Defense Network.
Education Secretary Miguel Cardona could decide this and other cases rather than leaving them to the Trump administration, which is expected to be far friendlier to for-profit colleges. “It’s a given,” Ament said. “There are a number of cases that are on Cardona’s desk. It’s hard to imagine that these would simply remain untouched.”
The Associated Press contributed to this report.
