(NEXSTAR) – President-elect Donald Trump returns to the White House after defeating Vice President Kamala Harris, but what will his second term mean for millions of Americans saddled with student loan debt? Maybe?
Mr. Trump and Republican lawmakers have previously criticized Mr. Biden's loan forgiveness efforts, saying it would be “unfair” to the millions of students who are paying off their loans. Lawsuits by Republican-led states are also blocking plans for widespread debt cancellation. But President Trump has not said what he will do about loan forgiveness, leaving millions of borrowers facing uncertainty about their personal finances.
Further complicating the situation, President Trump has vowed: dismantle the Ministry of Educationwhich oversees student loan policy.
President Trump has publicly distanced himself from the Heritage Foundation's Project 2025 playbook (despite wiretapping some of the people involved in its development), but if he changes his mind after taking office… The proposal calls for privatizing student loans and phasing out repayment programs. Ultimately, it will be impossible for the government to cancel debt.
Impact on student loan repayment amount
President Biden's signature Savings on Valuable Education (SAVE) plan is in legal limbo following a lawsuit by seven Republican state attorneys general. If the income-driven program is abolished under the next administration, enrollees' payments could increase, potentially reaching about 8 million people by mid-2024.
SAVE bases monthly payments on income and family size, allowing borrowers below 225% of the federal poverty line ($32,800) to make payments as low as $0. For other plans, that threshold is 150% of the poverty line ($22,000). SAVE also prevents interest from accumulating as long as adjusted monthly payments are made, and caps repayment terms at 20 years for undergraduate loans and 25 years for graduate loans.
This plan is currently pending in court. injunction In late October, the repayments were suspended interest-free for six months pending further progress from the Eighth Circuit Court of Appeals.
If a borrower is forced to choose an alternative repayment plan, monthly payments can jump significantly. In one Department of Education example, someone with an annual income of $40,000 and $45,000 in loan debt could see their payments increase from $60 to $151, $227, or $349, depending on the plan they choose. It is said that there is. Los Angeles Times.
Savannah Britt had about $27,000 in debt from loans she took out to attend Rutgers University, and was hoping President Biden's policies would reduce her debt.student loan forgivenesseffort.
“Nownew governmentthe dream disappeared. I got shot,'' said Britt, 30, who runs his own communications agency. “I was looking forward to it before, but [Election Day]. I was waiting for the procedure to be completed. My mother also has a loan taken out to support me. She owes about $18,000 and was on track to have it forgiven, but is stuck. ”
What is the Biden administration doing?
In response to Vice President Harris' election loss, President Biden said, “Let's take each day to heart.''
Among the priorities the Biden administration is rushing to address ahead of Inauguration Day: new federal regulations That would erase student loan debt for people who are struggling financially.
If the proposal is finalized, the Ministry of Education will carry out a “comprehensive assessment” before granting one-time debt relief to those who meet criteria for poverty. The second path to debt relief is through a “predictive assessment” process that forgives loans that have “at least an 80% chance of default within the next two years.”
The rule, proposed by the Department of Education in late October, is currently undergoing a public comment period, which is scheduled to end on December 2nd. The Biden administration then has limited time to finalize and activate the rules, a process that typically takes several months.
As with past efforts to seek debt relief, this one is likely to be challenged in court.
Additionally, Aaron Ament, an Obama administration Department of Education official and president of the National Student Legal Defense Network, said the Biden administration needs to accelerate student loan cancellation for people who were already promised relief because they were defrauded by their colleges. He said there is room to do so.
Education Secretary Miguel Cardona may decide on this and other lawsuits rather than handing them over to the Trump administration. The Trump administration is expected to be far friendlier to for-profit colleges. “It's that simple,” Ament said. “There are quite a few cases sitting on Cardona's desk. It's hard to imagine they'll just be left alone.”
The Associated Press contributed to this report.
