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Under the Biden administration, the U.S. Department of Education was active in announcing numerous student debt forgiveness initiatives, helping many borrowers through various relief programs and repayment plans.
However, the landscape has shifted significantly under President Donald Trump. In his early months in office, Trump, who has historically opposed broad education debt cancellation, implemented an executive order that restricted eligibility for the widely-utilized Public Service Loan Forgiveness (PSLF) program. Additionally, his Education Department revised several student loan repayment plans, eliminating pathways to loan forgiveness.
“You have the administration trying to limit PSLF credits, and clear attacks on the income-based repayment with forgiveness options,” commented Malissa Giles, a consumer bankruptcy attorney in Virginia.
The White House has not responded to inquiries seeking clarification on these developments.
Status of Repayment Plans and Forgiveness
Experts indicate that the Biden administration’s recent repayment initiative, known as Saving on a Valuable Education (SAVE), is unlikely to remain intact under Trump’s direction. A U.S. appeals court has already blocked the SAVE plan following a challenge from Republican lawmakers.
SAVE featured two significant benefits that drew legal scrutiny: it provided lower monthly payments than existing federal repayment plans and facilitated quicker loan cancellation for borrowers with smaller balances.
“I personally think SAVE will be dismantled through legal challenges or administrative actions,” remarked Giles.
The current Education Department, under Trump, asserts that a ruling from the 8th U.S. Circuit Court of Appeals necessitated the termination of loan forgiveness provisions under repayment plans apart from SAVE. Consequently, options like Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) no longer guarantee debt cancellation after a designated number of years.
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Amidst these changes, some positive news persists: at least one repayment plan continues to offer pathways to loan cancellation, noted higher education expert Mark Kantrowitz. The Income-Based Repayment (IBR) plan remains a viable option.
Borrowers enrolled in ICR or PAYE can transition to IBR, with their prior payments under these plans counting towards forgiveness, provided they meet IBR’s additional requirements. This approach may be appealing for those who face lower monthly payments under ICR or PAYE.
The Continuing Relevance of Public Service Loan Forgiveness
Despite Trump’s executive order in March that sought to restrict eligibility for PSLF, the program itself endures. Any potential alterations to PSLF may take considerable time to implement and could require congressional approval, according to experts.
Established under President George W. Bush in 2007, PSLF enables many government and nonprofit employees to have their federal student loans erased after making ten years of qualifying payments.
It’s noteworthy that any modifications to PSLF would not be retroactive. Consumer advocates emphasize that if you’re currently employed by or have previously worked for an organization that may later be excluded from the program, you will still receive credit for your qualifying period until any new rules take effect.
Currently, the executive order’s language lacks specificity, leading to uncertainty over which organizations may no longer qualify under PSLF guidelines. Early actions by Trump during his presidency have targeted diverse groups, including immigrants and those advocating for broader inclusion across sectors, many of whom are employed by nonprofits.
For individuals pursuing PSLF, it is advisable to print their payment history from StudentAid.gov or request documentation from their loan servicer. Keeping detailed records of qualifying payments is essential, as noted by Jessica Thompson, senior vice president at The Institute for College Access & Success.
“We encourage borrowers to maintain documentation of their payments, counts, and employer certifications to secure valuable information should it be needed in the future,” Thompson advised.
Exploring Other Loan Cancellation Options
Besides PSLF, federal student loan borrowers have access to various other cancellation opportunities. The Teacher Loan Forgiveness program offers up to $17,500 in loan forgiveness for those who work full-time in qualifying low-income schools or educational service agencies, among other stipulations.
It is important to note that this program cannot be combined with PSLF, so borrowers must evaluate which option aligns best with their circumstances.
In less prevalent situations, a complete discharge of federal student loans may be available under Borrower Defense if a school closes during enrollment or misleads students regarding education quality. Additionally, those with severe and permanent disabilities may qualify for a Total and Permanent Disability discharge, with required proof coming from healthcare providers or relevant government agencies.
As the federal government retracts student loan forgiveness measures, experts also suggest exploring numerous state-level relief programs available. The Institute of Student Loan Advisors offers a comprehensive database of state-specific student loan forgiveness options.
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