Vijay's View: What a Trump Presidency Would Mean for Student Loans
July 9, 2024 5 MIN READ
Written by Yaël Bizouati-Kennedy. Edited by T. Woods
The resumption of student loan repayments — which was on a three-year hiatus — finally began again last October, following the Supreme Court striking down President Biden’s student loan forgiveness program in a 6-3 June 30, 2023 decision.
The Biden administration has since rolled a slew of programs, including the SAVE Plan, which provides the lowest monthly payments of any income-driven-repayment plan available to nearly all student borrowers and would replace the Revised Pay-As-You-Earn (REPAYE) plan. As of May 2024, the total loan forgiveness approved by the administration amounted to $167 billion for 4.75 million Americans, according to the Department of Education.
Yet, a Donald Trump presidency might put an end to these new initiatives. The former president has been extremely vocal about his opposition to Biden’s student loan forgiveness, and said during a recent campaign rally that the program “is not even legal.”
Additionally, CNBC has reported that Trump wants to get rid of the Public Service Loan Forgiveness initiative (PSLF), “which benefits public employees such as members of the U.S. Armed Forces, first responders, public defenders, prosecutors and teachers.”
According to Trump’s campaign website, he also intends to close the Department of Education “very early in the administration,” adding that he will be “sending all education and education work and needs back to the States.”
Experts say that rolling back Biden’s measures could have several repercussions not only on borrowers, but on the economy as well.
It Could be “Devastating”
As Peter C. Earle, Senior Economist for the American Institute for Economic Research noted, the rollback would be devastating for many, as some borrowers have changed jobs, taken on new personal and social responsibilities and otherwise altered their lives and financial trajectories given their eligibility for loan forgiveness.
“For that reason, a complete rollback of student debt relief seems improbable,” he stated.
Earle asserted that current participants are likely to retain their benefits but eligibility for future reductions and forbearance may cease.
“While Trump is known for abrupt policy shifts, halting existing student loan mitigation efforts might be too extreme,” he said, adding, however, that it’s not outside the realm of possibility that he could suddenly, irrevocably, end those programs.
It Would Level the Playing Field
Others have a different stance about what the rollback could mean for student loan borrowers. Vijay Marolia, Founder and Chief Investment Officer of Regal Point Capital Solutions, noted that “it would mean that they would be treated the same as other borrowers.”