What Will the New Year Bring for Student Loan Borrowers?

The coming year promises to bring more uncertainty to the financial lives of the 43 million Americans with federal student loans.

One thing is certain: on Jan. 20, the White House will change hands from Joe Biden, who has pushed to forgive student debt, to Donald Trump, who heavily criticized his predecessor’s loan forgiveness policies. The Department of Education will likely be much less inclined to forgive student loans under the Trump administration.

Here are some of the significant changes in store for student loan borrowers in 2025:

Fate Of Biden’s Student Loan Reform Could Be Resolved

A major student loan overhaul by the administration of President Joe Biden was temporarily put on hold by courts after Republican-led states sued to block it. This fall, a judge stopped the department from implementing the new Saving For a Valuable Education (SAVE) repayment plan. This income-based plan offers generous repayment terms and forgives any remaining balance for borrowers who make payments for 10 to 25 years, depending on the amount of loans and whether they were for graduate or undergraduate education. 

That court ruling also blocked loan forgiveness under older income-driven repayment plans such as PAYE and ICR. SAVE made those two programs obsolete, but they were reopened for enrollment in December after the legal challenges froze the SAVE plan.

Since the rulings, the 8 million people on the SAVE plan have had their loans put into administrative forbearance, meaning they don’t owe any payments and won’t accumulate interest.

That case could go as far as the Supreme Court and be resolved in 2025. However, student loan experts speculate that the Trump administration could simply stop defending it in court, leading to its defeat.

Even Bigger Changes Could Be In Store

Because Republicans won control of Congress in the November elections, they will have a chance to remake student loan repayment rules as they see fit. In the past, Republican lawmakers have unsuccessfully introduced legislation to eliminate the Public Service Loan Forgiveness program.

Trump himself has proposed eliminating the Department of Education, which oversees the student loan system. That change would require the cooperation of lawmakers, and could be blocked by Democrats who have enough seats in the Senate to stop legislation with the filibuster rule. Trump did not lay out the details of who would oversee student loans if the department were gone, and whether existing student aid programs would continue in some way.