What to Expect From the Trump Administration on Student Loan Forgiveness

If you’re unsure about the future of student loan forgiveness, join the club (it has millions of members)! In 2024, President Biden faced legal obstacles when trying to implement his Saving on a Valuable Education Plan (SAVE). Because of these challenges, Biden recently withdrew this forgiveness initiative and another, Plan B. 

Now, with the transfer of power upon us, many borrowers wonder whether we can expect a Trump student loan forgiveness plan. So we’ll cover Trump’s history with student loans during his first presidency, the campaign statements he made about student loans in 2024, and predictions on what borrowers can expect during the next four years. 

Donald Trump’s history with student loans

Many borrowers worry that President-elect Trump may reverse some of Biden’s student loan forgiveness policies. So to understand what might happen in Trump’s next term, let’s look at some of the student loan policies his administration enacted in his 2016 – 2020 term.

2017: The Tax Cuts and Jobs Act

At the end of 2017, President Trump passed the Tax Cuts and Jobs Act. Initially, the administration proposed changes to tax deductions, including repealing the student loan interest deduction. 

In the end, the student loan interest deduction remained, but the act eliminated the tuition and fees deduction and deductions for education expenses for employees. 

2018: Proposed end to PSLF

In 2018, President Trump created a budget proposal called A New Foundation for American Greatness. In it, he proposed budget cuts to the Pell Grant Program and asked to eliminate the Federal Supplemental Educational Opportunity Grant Program (FSEOG) and the Public Service Loan Forgiveness Program (PSLF) for future borrowers.

Congress rejected this proposal. Trump included eliminating PSLF in his 2019 budget proposal, his 2020 budget proposal, and his 2021 budget proposal. The PSLF cuts did not come to fruition during President Trump’s first term, but given that he included eliminating the program in every budget, it’s reasonable to assume he will propose the same cuts in his second term.

Of note, eliminating the PSLF program would only affect future borrowers. Those currently enrolled in the program should be grandfathered into it and allowed to complete it.

2019: The FUTURE Act

The FUTURE Act became law in December 2019. This bill guarantees $255 million in annual funding for Historically Black Colleges or Universities (HBCUs). The bill also streamlines student loan eligibility by enabling the IRS to disclose tax information to recertify student loans or determine eligibility.

2020: The CARES Act

The biggest decision Congress and President Trump made regarding student loans in his first term was the CARES Act. In March 2020, Congress passed the CARES Act, which suspended student loan payments and paused interest accrual on student loans due to the pandemic.

Then, in August 2020, Trump wrote executive actions to extend federal student loan relief. When President Biden took office in January 2021, he extended student loan relief further.

2020: Reformed FAFSA 

In December 2020, President Trump signed the Consolidated Appropriations Act. This Act is 2,000-plus pages long, but about halfway through, it calls for “FAFSA Simplification.” This helped make applying for financial aid easier for students.

Will Trump reverse student loan forgiveness? What he said on the 2024 campaign trail

Many borrowers want to know whether President-elect Trump can reverse student loan forgiveness. It’s highly unlikely that Trump would reverse loan forgiveness that’s already taken place. 

However, he could transition borrowers into new, more streamlined plans by signing executive actions or proposing new laws.

President-elect Trump could also create more stringent rules for future student loan forgiveness, making forgiveness more challenging to get. He could also stop President Biden’s forgiveness initiatives that have not yet become law. Here are several examples of what President-elect Trump said about student loan forgiveness on the 2024 campaign trail.

Does Trump support student loan forgiveness?

President-elect Trump has made clear that he does not believe student loan debt should be canceled. 

Vice President-elect JD Vance also indicated that he believes student loan forgiveness only benefits the rich. As such, it’s possible Donald Trump may halt Biden’s student loan forgiveness plans. 

Right now, President Biden is using the remaining weeks of his presidency to try to push through student loan forgiveness options, specifically for borrowers likely to default on their loans.

Reforming the Department of Education

President-elect Trump mentioned eliminating the Department of Education (DoE) and allowing the states to manage their own budgets and curriculum reforms. 

The DoE oversees school safety and ensures schools follow laws. According to AP News, the department also distributes federal funding and manages federal student loans.

The National Association of Student Financial Aid Administrators explains that because Trump would need congressional approval to eliminate the DoE, it will be “nearly impossible” to do.

No specific plan yet

Although President-elect Trump criticized President Biden’s student loan forgiveness plans, Trump did not provide alternatives or an explanation of how he might implement changes to student loans in his second term.

Through his responses to Biden’s loan forgiveness legal battles, it’s clear President-elect Trump does not support Biden’s student loan forgiveness policies. Based on his budget proposals during his first term, Trump might try to eliminate PSLF again. However, he has not released a directive that explains the changes he will implement in 2025 and beyond.

Takeaways: What student loan borrowers should expect from the Trump administration

Borrowers with federal student loans, especially those who enrolled in the SAVE plan, have been living with uncertainty. During President-elect Trump’s second term, we can expect his administration to make several decisions regarding student loan repayment plans, including those in SAVE plan limbo.

The repayment options that will be available for student loan borrowers under President-elect Trump’s administration remain unclear. The administration could keep current repayment plans or create new ones. NPR also reports that President Biden has several unfinished student loan forgiveness proposals, which President-elect Trump’s administration will receive.

President-elect Trump is against broad student loan forgiveness, but in the past, he’s made forgiveness easier for certain borrowers, including disabled veterans. 

Although we can’t know what new student loan policies the Trump administration will adopt, here are a few steps you can take to prepare:

1. Don’t rely on forgiveness

Millions of student loan borrowers have had their loans forgiven, but that doesn’t mean Congress will pass laws to include more borrowers or approve President Biden’s proposals to enact forgiveness on a wider scale. It’s wise to continue making student loan payments as though they won’t be forgiven.

Borrowers enrolled in the Public Service Loan Forgiveness (PSLF) program would be an exception. While President-elect Trump could repeal the PSLF program, Betsy Mayotte, president of The Institute of Student Loan Advisors, said it would not affect borrowers currently enrolled in it.

The income-driven repayment plans most of my clients enroll in are Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). As recommended, they make their payments on time, and most pay no more than the monthly payment. (This will likely change—to make additional payments when able—once a decision is made with the new administration.) 

It is wise to maintain federal loans and not refinance into a private loan, which would cause them to lose the repayment benefits most private student loans do not offer. I recommend that my clients direct their “extra” funds to cash reserves and establish an aggressive repayment plan as Plan B.

Erin Kinkade, CFP®

2. Get organized

President-elect Trump could limit student loan forgiveness and change repayment plans. He could combine income-based repayment plans or change qualifying criteria, so it’s important for borrowers to get organized. 

Keep detailed records of your federal student loans, including your servicer, loan amount, interest rates, and current repayment plan. If you are enrolled in PSLF pursuing forgiveness, make sure you’ve submitted all qualifying documentation and that your records are up to date. 

If PSLF is eliminated for new borrowers during the next four years, it’s important to establish a record if you want to be among the borrowers allowed to stay on the plan.

3. Make a payment plan

If you’re not expecting student loan forgiveness and you’re not enrolled in PSLF, create a student loan debt payment plan. Use a student loan calculator to see how extra payments could accelerate your payoff date, and create a budget that helps you prioritize your debt payments so you can be financially free sooner.

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