Potential Implications of a Trump Presidency on U.S. Student Loans

Following the recent presidential election, federal student loan borrowers are facing increasing uncertainty concerning the future of their repayments and possible loan forgiveness plans. This uncertainty is further exacerbated by President Biden leaving office with his student loan relief efforts largely mired in legal challenges, and by former President Donald Trump’s opposition to broad-based student loan forgiveness.

President Biden’s significant loan forgiveness initiative was struck down by the Supreme Court, which ruled that his proposed plan exceeded the legal authority granted to the executive branch. This has prompted ongoing legal debates as to whether any president possesses the unilateral power to broadly cancel student loan debt. According to Michael Brickman, an adjunct fellow at the American Enterprise Institute, the legal authority to cancel such debt firmly resides with Congress.

Another substantial initiative, Biden’s «Saving on a Valuable Education (SAVE) Plan,» aimed at reducing monthly payments for borrowers and preventing ballooning interest. However, this plan also faces judicial scrutiny due to its perceived circumvention of Congressional authority. Approximately 8 million borrowers enrolled in SAVE are currently not required to make payments as the courts deliberate over the plan’s legality.

With the Trump administration possibly resuming office, there is potential for the SAVE plan to be phased out or altered significantly. Republican attorneys general have already challenged its legality, and should the courts ultimately uphold these challenges, the Biden administration’s Department of Education would be the likely candidate to appeal.

Meanwhile, the fate of alternative repayment plans, including Income-Based Repayment (IBR), which remain unchanged due to their Congressional creation and protection, remains on uncertain ground due to potential policy shifts. IBR plans continue to provide limited loan forgiveness grounded in income levels.

Moreover, Biden’s «Plan B» for student loan forgiveness has encountered legal barriers and is embroiled in another protracted legal encounter with Republican state attorneys general. Furthermore, Biden proposed regulations aimed at aiding those with high caregiving costs have not yet been challenged, although their future under a Trump presidency remains ambiguous.

While no policy currently suggests ending the federal student loan program entirely, discussions within «Project 2025» propose transferring management to a more autonomous government corporation. Despite President Trump’s disapproval of this project, its proposals—crafted with contributions from Trump allies—could influence policy directions.

As the Biden administration’s efforts unfold within America’s legal framework, his extension of loan forgiveness for specific public service or disability-related scenarios reflects a degree of success, albeit within legal confines. The administration’s expansion of access to existing federally approved programs remains vulnerable to revocation but is less susceptible to current legal challenges.

The results of public sentiment surveys such as one by the Associated Press and the University of Chicago demonstrate differing opinions on student loan relief, with a significant partisan divide. These findings reveal an intricate backdrop against which future loan policies will unfold, especially as Republicans gain ascendancy in Washington.