Former President Donald Trump has won the 2024 presidential election. Throughout the past year, we have debated the prospects of student loan forgiveness—will they or won’t they? Now that the next President is known, we can make some predictions about the upcoming administration's stance on student loan forgiveness.
Trump Administration
The Trump administration has remained largely silent on the issue of student loan forgiveness. However, former President Trump has expressed his opposition to the Biden administration's efforts to implement mass student loan forgiveness. GOP-led states have also legally challenged these initiatives, which are currently facing legal scrutiny.
It is anticipated that mass student loan forgiveness initiatives will not be pursued when Trump returns to office. Additionally, the SAVE Plan may face increased risk of elimination under his administration. Trump has openly criticized the U.S. Department of Education, even suggesting the dismantling the entire agency.
At this point, it remains unclear how his administration would achieve this, given that the U.S. Department of Education oversees the federal student aid programs to offer financial aid at colleges and universities, it also manages vital aspects of public elementary and secondary education across the nation.
President-elect Trump's campaign platform emphasizes reforms in higher education alongside significant changes in elementary and secondary education. Many of his priorities reflect or have evolved from his first term, during which his Secretary of Education, Betsy DeVos, was a staunch proponent of school choice for elementary and secondary options. There were also considerations to transfer the federal student loan portfolio from the U.S. Department of Education to the U.S. Treasury. However, both initiatives struggled to gain momentum, particularly as the focus shifted to addressing the challenges posed by the COVID-19 pandemic.
The Role of Congress in Student Loan Forgiveness
While the executive branch has a considerable influence on student loan forgiveness policies, Congress also plays a critical role. Legislative action is required to enact long-term and comprehensive reforms to the student loan system. In recent years, Congress has been divided on the approach to tackling the student debt crisis. Some lawmakers advocate for expansive forgiveness and reforms, while others express concern about the fiscal impact and fairness of widespread loan cancellation. Bipartisan cooperation is essential for any major legislative changes in this area.
In addition, President Trump may face limitations in swiftly enacting reforms to programs which are codified into law. For instance, Public Service Loan Forgiveness (PSLF) is included in the Higher Education Act of 1965, as amended, meaning any changes or potential elimination to the law would require an act of Congress. That doesn't mean that existing aspects of the PSLF plan can't be modified if the terms are not included in law. The route of Congressional action may be challenging, given Congress's difficulty in securing the necessary votes for contentious issues. In contrast, the creation of the SAVE Plan was based on existing law through a negotiated rulemaking process, which is a process to create regulations. This framework places the program at a greater risk of being eliminated, as it has been argued that it was not implemented in alignment with the law's original intent.
Student Loan Forgiveness, a Brief History
Historically, student loan forgiveness has been granted to borrowers after they complete service in certain fields. Eligibility for forgiveness has depended on factors such as the type of federal student loan, the date it was borrowed, and the borrower's employment field. While many federal student loan forgiveness programs have been phased out over the years, PSLF was established with the passing of the College Costs Reduction and Access Act (CCRA) in 2007. Alongside Teacher Loan Forgiveness (TLF) and income-driven repayment plans, these have become the primary options for federal Direct Loan borrowers seeking forgiveness.
When the Biden administration took office, they encountered a Direct Loan portfolio paused due to pandemic relief measures. Among his campaign commitments was a pledge to tackle the pressing student loan crisis. In response, the administration launched initiatives aimed at providing relief to millions of borrowers. By utilizing existing student loan programs, enacting waivers, and implementing servicing adjustments, the Biden administration successfully forgave over $168 billion in student loans.
How to Manage the Election Results
As of now, the Biden administration is still in office and will remain in control until the inauguration in January. Students and borrowers should continue making payments on their student loans, as required, and should hold tight to determine the future of student loan repayment and forgiveness opportunities—this is not the time to make rash decisions.
The SAVE Plan is currently on hold due to legal challenges, and we expect to hear a result any day now. However, the Biden administration has made it clear that he will fight for the plan while he is holding the position as President.
As far as forgiveness, Biden's last effort, Plan B, is being held up in a Missouri court. It's not likely that the court would rule in the favor of forgiveness, and it's even more unlikely that the Trump administration will take over the fight in the new election. With the Supreme Court overturning Biden's original plan, it wouldn't be wise to expect a different outcome with the challenges of Plan B.