With President Donald Trump back in the White House and Republicans controlling Congress, concerns are mounting over the future of key student loan relief programs. Experts warn that initiatives such as the SAVE repayment plan, lenient bankruptcy protections, and other student aid programs introduced under the Biden administration face significant uncertainty.
The SAVE Plan: A Popular Program in Jeopardy
Launched in 2023, the Saving on a Valuable Education (SAVE) plan was celebrated as “the most affordable student loan plan ever” by the Biden administration. Designed to halve monthly payments for many borrowers and accelerate loan forgiveness for smaller balances, the program quickly gained popularity, with around 8 million borrowers enrolling.
However, the SAVE plan encountered legal challenges from Republican attorneys general in Kansas and Missouri, who argued it was an indirect attempt at debt forgiveness after the Supreme Court blocked Biden’s sweeping cancellation plan. According to higher education expert Mark Kantrowitz, the Trump administration may use multiple strategies to dismantle SAVE, including halting its defense in court, issuing new regulations, or supporting congressional action to repeal it.
Currently, SAVE enrollees are not required to make payments while the plan remains tied up in litigation. But this temporary reprieve may soon end.
Bankruptcy Protections at Risk
For years, federal student loans were nearly impossible to discharge in bankruptcy. The Biden administration introduced new guidelines in 2022 to ease the process, aligning student loan debt with other types of debt in bankruptcy court. This shift was seen as a lifeline for struggling borrowers.
However, experts like Kantrowitz predict that Trump may reverse these policies. “There may be a more scorched earth approach to opposing all attempts to discharge federal student loans in bankruptcy,” he said. While some consumer bankruptcy attorneys, like Malissa Giles, remain cautiously optimistic, others fear a return to stricter guidelines under new Republican-aligned U.S. attorneys.
Other Student Loan Programs Facing Cuts
House Budget Committee Republicans are reportedly considering rolling back several Biden-era student loan relief measures. Proposals include:
- Partial repeal of Borrower Defense regulations, which allow debt forgiveness for borrowers defrauded by their schools.
- Reforms to Public Service Loan Forgiveness, potentially limiting eligibility for the program.
- Eliminating the student loan interest deduction, which previously allowed borrowers to deduct up to $2,500 annually in interest payments. Before the pandemic, nearly 13 million taxpayers utilized this deduction.
These changes could have widespread implications for the over 40 million Americans who collectively owe $1.6 trillion in federal student loans.
A Shift in Student Loan Policy
Consumer advocates express concern about Trump’s critical stance on student loan forgiveness. At a campaign rally, he called Biden’s efforts “vile” and “not even legal.” Such rhetoric, coupled with the Republican Congress’s interest in reducing student aid, signals a likely rollback of borrower protections.
Kantrowitz notes, “This administration could significantly reshape the landscape of student loan relief, with many programs potentially being scaled back or eliminated entirely.”
As federal student loan borrowers face a potentially tougher landscape under the Trump administration, uncertainty looms over key programs that have provided relief and support. With millions of Americans relying on these measures to manage their debt, the stakes couldn’t be higher. Advocates and borrowers alike will be closely watching developments in the coming months.
