Title: Trump’s Victory May Curb Student Debt Relief for Millions
President-elect Donald Trump has made it clear that he is not in favor of student debt relief, and experts expect that he will abandon or roll back many of the student loan efforts implemented by the Biden administration. One such effort is the SAVE program, which was designed to cut monthly bills for millions of federal student loan borrowers in half.
The program, which was temporarily suspended by a federal court, has already been enrolled in by around 8 million borrowers. If the Trump administration abandons SAVE, these borrowers will be forced to shift to a different repayment plan with significantly higher monthly payments.
“Unfortunately, I think SAVE probably will go away,” said Betsy Mayotte, president of The Institute of Student Loan Advisors. “It’s not the first time that a payment plan has been eliminated.”
Under the SAVE program, borrowers would have paid only 5% of their discretionary income towards their undergraduate student debt, compared to 10% under the previous REPAYE option. Those who earned less than roughly $15 an hour had a $0 monthly bill, and borrowers with smaller balances were entitled to loan forgiveness on an expedited timeline.
Republican-backed states have argued that the Biden administration overstepped its authority with SAVE, and the plan was put on hold by a federal court pending further legal action. While the Education Department has forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE Plan, it is unclear what will happen to these borrowers if SAVE is abolished.
Proponents of the relief plan argue that student loan borrowers need more affordable repayment options. A recent survey by the Consumer Financial Protection Bureau found that nearly a third of borrowers have gone without food, medicine or other necessities because of their monthly bills.
“The challenges that people will face when their payments double will be significant,” said Malissa Giles, a consumer bankruptcy lawyer in Virginia. “It’s a crazy hot mess.”
With Trump set to return to the White House in January, borrowers enrolled in SAVE should be prepared for their administrative forbearance to come to an end. The incoming administration has not indicated whether it will continue to defend the plan in court or scrap it entirely, leaving borrowers facing uncertainty and potential financial strain.