What Another Trump Presidency Means For Student Loan Borrowers | Global News Avenue

Student loan borrowers are worried about their financial future after the election of Donald Trump, whose rhetoric has been hostile to Joe Biden-era loan forgiveness programs.

The change in government has added to the uncertainty for millions of borrowers, who don’t know whether they will need to repay their student loans in the future and, if so, how much. Over the past year, the Biden administration has informed borrowers of what’s to come Extensive loan forgiveness program and new student loans repayment plan Only to see those plans stalled by legal challenges.

On social media, student loan borrowers are wondering whether Trump will follow through on his anti-loan forgiveness rhetoric, how much their monthly payments will increase and whether even previous rounds of forgiveness will be reversed.

Student loan experts say some of Trump’s proposals would be easy for him to implement, while others would be nearly impossible.

Biden’s student loan forgiveness in deeper danger

Trump’s victory worsens the prospects for anyone to get loan forgiveness under two Department of Education proposals that were supposed to take effect this fall but were temporarily blocked by courts.

first one will forgive Borrowers who have been paying off their debt for years, people who owe more than when they started making payments and people who are eligible for other loan forgiveness programs but haven’t applied yet. interim federal judge block this program Republican-led states filed a lawsuit last month to overturn the bill, which remains pending while the legal battles take place.

The second is to forgive borrowers’ loans in financial trouble Who are at higher risk of default. The plan is scheduled to take effect in 2025, when Trump takes office. Mark Kantrowitz, a student loan expert, said groups opposed to loan forgiveness may also sue to stop the program.

Trump has several options to block these moves. If the lawsuits are resolved before Trump takes office, he may initiate regulatory proceedings to reverse the new rules, although that may take time. In the meantime, Kantrowitz said the department can continue to implement the policy.

Kantrowitz said it’s more likely the lawsuits won’t be resolved before Inauguration Day, in which case the Trump administration could drop its legal defense against the lawsuits. Betsy Mayotte, president of the Association of Student Loan Counselors, a nonprofit group that provides student loan advice, said the chances of getting loan forgiveness under these policies are slim anyway.

“I don’t think the Biden administration has enough time to get this done,” Mayotte said. “So I think, unfortunately, it’s dead.”

SAVE program more likely to be scrapped

Trump’s rise to power has also worsened prospects for an already shaky savings repayment plan launched by the Biden administration this year.

The plan offers lower monthly payments than previous income-driven repayment plans, does not allow interest to accrue, and, in some cases, allows borrowers to make payments in as few as 10 years (instead of the standard 20 or 20 The loan will be repaid after years). 25.

Earlier this year, the court temporarily blocked The plan comes after Republican-led states filed a lawsuit to block the plan. Eight million borrowers enrolled in the SAVE program are currently in payment deferral, with interest and required payments frozen.

With Trump in the White House, SAVE’s prospects are bleak, as the government may give up on defending it in court. However, Kantrowitz said most borrowers currently enrolled in SAVE should continue using it for the time being.

“If the SAVE scheme disappears, they will go back into repayment. At that time they will have the opportunity to switch to another income-based repayment scheme. Since they will not be charged interest, there is no need for them to remain in the SAVE scheme except for time. There will be no costs,” he said.

Major changes to PSLF will take time

Republicans have repeatedly tried to repeal the Public Service Loan Forgiveness (PSLF) program signed into law by President George W. Bush in 2007. Repealing PSLF will require the cooperation of Congress, which has a slim Republican majority.

Lawmakers proposed eliminating the program during Trump’s first term, but that effort failed. Even if the program is canceled, borrowers currently enrolled in PSLF may be allowed to stay in it and receive forgiveness, Kantrowitz said, but the program will no longer accept new enrollments.

That’s what would happen if Republicans introduced a repeal bill in 2017. It’s unclear whether repealing PSLF will become a top priority for the Trump administration.

“Would they want to spend the money on getting out of PSLF, or are there other things that are more important to them?” Kantrowitz said. “I think PSLF will probably survive.”

The Department of Education is unlikely to be abolished

On the campaign trail, Trump said he would eliminate the Department of Education entirely. It’s unclear how this will affect student loan borrowers, but Kantrowitz said it’s unlikely in any case.

Like eliminating PSLF, eliminating the department would require Congress to pass a law. The Senate will be an obstacle because Democratic lawmakers have enough votes to block legislation. Trump may prefer to use the department to influence education across the country rather than eliminate it.

“More likely, they’re just using it to implement their agenda,” Kantrowitz said.

Old debts unlikely to be ‘unforgivable’

While Biden failed to achieve broad student loan relief, his administration’s rule changes left 4.8 million borrowers with $175 billion worth of debt under certain circumstances.

Some borrowers on social media worry that given Trump’s hostility to Biden’s student loan relief plan, he or the courts will overturn previous rounds of relief and reinstate discharged debt.

Kantrowitz said even in the worst-case scenario, that might not happen.

“It’s extremely unlikely that this would happen,” Kantrowitz said. “The courts never do that.”