Most federal student loan borrowers weren't making payments when Former President Donald Trump left office in 2021, due to the pandemic forbearance he initiated in March 2020. And at least 8 million borrowers currently enrolled in the Saving on a Valuable Education repayment plan won't be making payments as he returns to the White House.
Student debt was not as much of a hallmark campaign issue in the 2024 presidential election as it was in 2020. As such, it's not explicitly clear how President-elect Donald Trump plans to approach it. He hasn't made any indication he's interested in forgiving student debt and has called some of Biden's initiatives "vile."
But moves he made during his previous term in office and comments made along the campaign trail show some potential outcomes. Here are three ways a Trump presidency could impact student loan borrowers.
The 8th Circuit Court of Appeals in Missouri is currently weighing whether the Biden administration can move forward with lowering monthly payments and forgiving loans through the SAVE income-driven repayment plan, while its legality is debated in a lower court. The Biden administration has committed to defending the plan, but it's unclear if the next Trump administration will follow suit.
"The reason [the Biden] administration is defending the rule so vigorously is it was providing a much more affordable repayment plan," Persis Yu, deputy executive director and managing counsel at Student Borrower Protection Center, tells CNBC Make It.
A separate multi-state lawsuit also challenging provisions of the SAVE plan is currently with the 10th Circuit Court of Appeals in Kansas, but has taken a backseat to the Missouri case because a decision in Missouri could render the Kansas case null. It's a confusing back and forth with no clear end in sight, Yu says.
When the dust does settle in one or both cases, it's not clear how student loan repayment would proceed. Millions of borrowers may not know what their monthly payment will be for the foreseeable future.
During his first term in office, Trump proposed slashing funding to a variety of higher education programs and eliminating Public Service Loan Forgiveness, although the measure didn't pass. If he wants to completely eliminate existing forgiveness programs like PSLF or borrower defense to repayment, which helps those defrauded by their academic institutions, he will need Congressional support.
However, debt relief could still be stalled if the administration manages it differently, Yu says, highlighting what happened during Trump's first term.
Borrowers first started to become eligible for loan forgiveness through PSLF in 2017, a decade after Congress introduced the program. But as of 2019, roughly 99% of borrowers who applied for PSLF were rejected. In July of that year, one of the largest teachers unions in the country sued then-Secretary of Education Betsy DeVos over her mismanagement of the program. They settled in 2021.
Similarly, the Trump administration loosened the rules for institutions to demonstrate successful outcomes for students, allowing it to deny an estimated $11 billion in debt relief to borrowers defrauded by programs like those at for-profit colleges.
And like the SAVE plan, Biden's plan B for broad debt forgiveness is also currently tied up in court. The plan aims to provide debt relief to millions of borrowers who entered repayment decades ago, owed more than they initially borrowed or enrolled in low-value academic programs. While the Biden administration promised to keep defending it, it's unlikely the Trump administration will continue fighting the Republican-led lawsuits.
Democrats opposed Trump in part because of his embrace of an agenda known as Project 2025. The agenda was written by right-wing think tank The Heritage Foundation and outlined a kind of wish list of policy proposals for the next president.
Later in the campaign, Trump attempted to distance himself from the unpopular ideas laid out in the agenda, but it's possible he could enact similar policies he is aligned with.
Project 2025 calls for a total end to certain programs, including PSLF and borrower defense to repayment. Long-term, the agenda calls for the dismantling of the Department of Education altogether, an idea directly supported by Trump, and for a return to reliance on private lenders for higher education financing.
If that happens, Yu says she and her organization are concerned about "what kind of corporate interests are going to be protected over the interests of borrowers and students."
Private student loans can be more costly to borrowers since interest rates are set by the lenders themselves, rather than Congress. Plus, federal loans come with myriad protections, such as the ability to enter forbearance if you're struggling to pay.