Kevin Wolf/AP for The Debt Collective
The Debt Collective hosts a rally outside the White House on September 12, 2024, in Washington, calling on the Biden administration to cancel student loan debt for the fastest-growing demographic of borrowers, Americans over the age of 60.
With Donald Trump returning to the White House next January, the fate of the Biden administration’s student loan debt forgiveness and repayment programs hangs in the balance. And with women and people of color more likely to take on debt to attend college, eliminating these programs could exacerbate existing racial and gender inequalities among borrowers.
Republicans have opposed multiple attempts by the Biden administration to expand student debt relief, going well beyond the mass debt relief program that the Supreme Court struck down in 2023. Earlier this year, Republican attorneys general filed lawsuits challenging the legality of programs like the SAVE (Saving on a Valuable Education) Plan, an income-driven repayment (IDR) plan meant to lower monthly payments and offer loan forgiveness after at least ten years of repayment (or more depending on the loan type and amount).
Project 2025 also calls for the elimination of the Public Service Loan Forgiveness program, which offers complete debt forgiveness for borrowers who have worked for the government or a nonprofit organization for at least ten years. The authors of the document argue that PSLF unfairly favors public-sector over private-sector employment.
PSLF, signed into law in 2007, was dysfunctional prior to the Biden administration, with Trump’s first-term education secretary Betsy DeVos approving just a tiny sliver of those who applied for debt forgiveness. The Biden administration fixed the program, and by this October, over one million borrowers had PSLF loans canceled.
But Trump’s return could mean that promises made on PSLF could simply be broken, with government or nonprofit workers who played by the rules on the expectation of debt relief denied cancellation and thrown into chaos. Meanwhile, Congress and the White House could attempt to end PSLF for new entrants.
“Teachers, firefighters, nurses, social workers and other public servants who are just a few months away from earning cancellation through PSLF already face enough barriers to earning the relief they’re entitled to, and a Trump presidency will work to walk back every gain debtors have made in the past four years,” said Braxton Brewington, spokesperson for the Debt Collective, a union of debtors.
Income-driven repayment plans have been in place since the 1990s, without any legal challenge. But the SAVE program was more generous than prior versions. Republicans have often argued that this type of debt relief is too costly to the government. They’ve also claimed that it’s unfair to older borrowers who already paid their debt or those who didn’t go to college to offer relief to new borrowers.
The Trump administration’s targeting of student debt relief programs may further discourage high school students from attending college.
Had the SAVE Plan been successfully implemented, it was estimated to cost anywhere from $391 billion to $559 billion across a ten-year window, according to a 2023 brief from the University of Pennsylvania’s Wharton Budget Model. That figure, however, doesn’t take into account the complex structure of how student debt is calculated, by compounding interest and recapitalizing it into principal. As a result, debtors often pay the total amount of what they borrowed and still owe more than the original principal.
Millions of borrowers have already been left in limbo as SAVE remains tied up in court. In place of those and similar loan forgiveness programs, Republicans have proposed privatizing all lending programs or consolidating all federal loan programs into a single IDR program with no possibility of loan forgiveness.
In Trump’s first term, the Education Department denied applications for debt relief from borrowers who completed prior income-driven repayment programs. And they defied federal courts which ruled that borrowers who were defrauded by their colleges deserved under the law to have their loans canceled.
While DeVos isn’t returning in the second term, Trump’s new selection for education secretary, former Small Business Administration head and WWE executive Linda McMahon, is a Trump loyalist who could be expected to carry out his wishes.
“Trump’s campaign rhetoric on higher education and subsequent pick for secretary of education serves as a massive threat to working-class student debtors trying to make ends meet every month,” said Brewington. “But most borrowers don’t need to speculate what will come—they remember the systemic failures of the first Trump administration, from sweeping improper PSLF and IDR denials to resisting court-mandated relief for defrauded borrowers.”
Around 45 million Americans owe some amount of student loan debt, with a national average balance of $35,210. With 50 percent of student loan debt coming from grad school, there’s an assumption that debt relief would primarily benefit higher-income graduates. But a 2022 report from the Federal Reserve Bank of St. Louis found that women and people of color are more likely to owe student loan debt and at higher balances, with Black women owing the highest average balance at $11,000.
The average loan balance also varies by state or territory, with Washington, D.C., having the highest average balance at over $54,000. During the 2019-2020 school year, 17 percent of Black students had to borrow at least $50,000 to complete their undergraduate studies, compared to 10 percent of white students and 7 percent of Hispanic students.
When college or graduate students graduate, they are given a grace period in which their loans do not accrue interest. This is to allow them time to find jobs that can help them pay off their debt. But with existing racial and gender pay disparities, women and people of color already take longer to pay off their student debt, accruing more interest in the process. Having limited pathways to loan forgiveness under the new administration will likely keep more people trapped in ever-mounting debt.
There’s a chance that the Trump administration’s targeting of student debt relief programs may further discourage high school students from attending college. The average cost of tuition and fees alone has nearly doubled for both public and private four-year institutions since the 1994-1995 school year, and students who want to attend college have increasingly relied on loans to cover these expenses. Some of these students may come from households that can’t afford tuition and fees but make too much money to qualify for need-based aid like the federal Pell grant. Even students who do qualify for need- or merit-based grants and scholarships may still need to take out loans at some point during their schooling. The families of these students may decide that going to college may not be worth the prospect of going into debt, with little to no possibility of forgiveness.
As disastrous as the elimination of these loan forgiveness programs would be, there is something of a silver lining. Under the Biden administration, the Department of Education has announced an interim rule that will temporarily reopen enrollment in two IDR plans: the PAYE (Pay As You Earn) Plan and the ICR (Income-Contingent Repayment) Plan. Loan repayments through these plans can give borrowers pathways toward loan forgiveness under PSLF or IDR while the status of SAVE is being decided by the courts. The rule extends the enrollment end date from July 1, 2024, to July 1, 2027.
But that is all contingent on whether the Trump administration will honor those previous promises on debt relief.
