What a Trump presidency means for student loan borrowers

A quarter of Americans under the age of 40 have at least some student loan debt. That's according to Pew Research. With President-elect Trump set to return to the White House in 2025, President Biden's student loan forgiveness plans will likely be impacted. Here to break down what this means for borrowers is Mark Krantz Rowitz, who is the student loan expert and author of the book, How to Appeal for More College Financial Aid. Mark, good to have you back on the program here with us. First, what are the biggest changes that you're anticipating once we go from a Biden administration to the incoming president-elect Donald Trump? President Trump has historically not supported loan forgiveness, so I would expect him to drop the Biden administration's efforts to implement broad student loan forgiveness and student loan forgiveness for economic hardship. If all of those are being sued under the Administrative Procedures Act and other rules, I would expect them to file a motion with the court to drop their support for the programs. So what does that mean for students and the more immediate kind of plans that they've already enrolled in? So those are new plans, and so current borrowers aren't affected by them. There is the Save Repayment Plan, which is also facing a lawsuit, and a court ruling is imminent on the legality of that plan. Currently borrowers in the Save Repayment Plan are in an interest-free forbearance that will likely continue until the court rules, and then there will probably be an appeal of that ruling to the U.S. Supreme Court, but there is unlikely to be any hearings or even a court ruling on such an appeal until after the Trump administration takes office. So if the Save Repayment Plan is eliminated, as well as the Repay Plan upon which it was based, then the borrowers will still be able to choose the Income-Based Repayment Plan and the Pay Plan, which were both established by law, and Congress passed laws creating these plans, and the forgiveness that occurs after 20 or 25 years in these repayment plans. Is there a pathway forward for students who are trying to see some type of forgiveness, even under the next administration? Is it clear what the former president, now president-elect Trump, campaigned on for the attention of students, if anything? So Project 2025 and President Trump have opposed public service loan forgiveness. To get rid of it would require an act of Congress. Most likely, if Congress were to repeal it, which doesn't seem too likely, existing borrowers would be grandfathered in. So any changes to eliminate the Public Service Loan Forgiveness Program would apply to only new borrowers who had not previously borrowed from the federal student loan programs. And so, all these things in mind, if you're a student that is trying to figure out where you can get and seek further financial aid, is there any change to the federal student aid that you can apply for that you should anticipate for the next school year? Well, simplification of the FAFSA is ongoing. Hopefully, it'll be much better this year than last year. The Pell Grant has a new formula, in addition to the old formula, based on a comparison of income with a low multiple of the poverty line. So that's something that borrowers may be eligible for. There's also, if you have student loans, there's the student loan interest deduction. That still exists. The Tax Cuts and Jobs Act of 2017 expires at the end of 2025. That will eliminate the tax-free status of certain loan forgiveness programs, not all of them. So, after 20 or 25 years, an income-driven repayment plan. That seems unlikely to be extended, though you never know what course trading may occur in Capitol Hill when members of Congress want one thing or another. The Republicans seem likely to have a majority, retain a majority in the House, and they already have a majority now in the Senate, but they don't have a supermajority, which is 60 votes required to prevent a filibuster. Now they could eliminate the filibuster, or they could use a budget reconciliation bill, which is not subject to a filibuster, to pass legislation that cuts the budget by eliminating programs. But it remains to be seen what the White House and members of Congress will do in the next administration. And just lastly, Mark, while we have you here, you actually mentioned within your notes interest rates, specifically on federal student loans, and what the anticipated changes are on that front. What are you looking for there? So the interest rates on federal student loans change each July 1st for new loans, based on the last 10-year Treasury note auction in May. The current 10-year Treasury note auction yield is about the same as it was last May, which would suggest that there would be no change in the interest rates come May, but that's six months from now, and a lot can happen between now and then. Now, the Federal Reserve has been cutting interest rates 75 basis points, three quarters of a percent so far, but that has not really had an impact on the 10-year Treasury note, in part because of concerns about the impact of tariffs and deficit spending on the inflation rate going forward. So a lot remains to be seen on what the Trump administration actually does and what impact that has on inflation, and therefore what the Federal Reserve does to cut interest rates. Mark Kantrowitz, who's the student loan expert joining us here today. Mark, thanks so much for taking the time. Appreciate it, as always. Thank you.