Trump and Student Loans: What Could Happen and How Borrowers Can Prepare

President Donald Trump is back in the White House. He's poised to overhaul the federal student loan system and rein in relief options for struggling borrowers.

Borrower advocates are currently grappling with a Jan. 27 White House memorandum that demands a pause to all federally funded loans, grants and other financial assistance programs. The U.S. Education Department says this directive will not impact student aid that goes directly to individuals.

“Per the OMB memo issued yesterday, the temporary pause does not impact ‘assistance received directly by individuals.’ As such, Title IV, HEA funds that are provided to individual students, such as Federal Pell Grants and Direct Loans, are not impacted by yesterday’s guidance,” Education Department spokesperson Madi Biedermann told NerdWallet on Jan. 28.

Whether you’re thinking about taking out student loans or you’re already in repayment, here’s what you can expect from the new Trump administration — and steps you can take to prepare for potential changes ahead.

» MORE: What the Trump win means for your personal finances and the economy

Broad student loan forgiveness is very unlikely

Former President Joe Biden abandoned “plan B” for broad student loan forgiveness. This plan, which could have erased student debt for borrowers with financial hardships like high medical or childcare costs, is not happening.

Republican-led states also filed lawsuits that took down Biden’s original student loan forgiveness plan of up to $20,000 per borrower in 2023, along with lawsuits currently circling the SAVE repayment plan.

Other existing federal student loan forgiveness programs may also be on the chopping block.

Biden's administration erased nearly $184 billion for 5 million student loan borrowers through new and existing programs — a historic record.

SAVE and other income-driven repayment plans could disappear

The SAVE repayment plan faces lawsuits, with its future largely dependent on the courts. The Trump administration is not likely to continue defending the SAVE plan in court, says Jessica Thompson, senior vice president at The Institute for College Access & Success, a nonprofit that advocates for an affordable and accessible higher education system.

“I think that [the election] doesn't necessarily 100% guarantee what happens with the lawsuits, but we are certainly operating under a reality where we are likely to not see SAVE implemented in the way that it was designed by the Biden administration,” she adds.

» MORE: How borrowers can navigate the SAVE lawsuits

Instead of SAVE and other existing IDR plans, Project 2025 calls for a single IDR option that would generally increase monthly payments for borrowers relative to SAVE and other current options. It would also aim to remove the IDR forgiveness option (under current IDR plans, borrowers can get forgiveness after 20 or 25 years of payments).

However, a more likely scenario is that only the existing Income-Based Repayment (IBR) and Paye-as-you-Earn (PAYE) plans will remain open to borrowers, Thompson says.

IBR is safest because it was authorized by Congress, whereas the Education Department established newer income-driven repayment plans like SAVE and its predecessor REPAYE through a process called “negotiated rulemaking” — so Congress did not vote on them. Though PAYE was also created via negotiated rulemaking, its benefits and design match the Congress-approved IBR plan, Thompson explains.

Previous forgiveness might face threats

There’s a possibility that borrowers who’ve already received student loan forgiveness might have to pay it back — but it’s still unlikely, Thompson says.

“Unfortunately, I think we are in a situation where the rhetoric is so heated and the policy decision-making so unpredictable and not based on precedent, that it's hard to to be able to quell the concern,” she says.

Borrowers who received forgiveness under Biden administration efforts like the one-time income-driven repayment waiver (also known as the "IDR account adjustment") are most at risk, Thompson says. Those who’ve earned forgiveness through longstanding statutory programs like PSLF are less at risk, she says.

» MORE: IDR waiver wraps up. What's next for borrowers?

However, a senior official in Biden's Education Department denied that borrowers who already received notification about forgiveness are at risk of losing it. Revoking previous student loan forgiveness would be uncharted territory, so borrowers shouldn’t be overly concerned or make financial decisions with the assumption that their loans will be reinstated at this point, Thompson says.

Public Service Loan Forgiveness could see issues

As president and on the campaign trail, Trump has called for restricting loan forgiveness overall and making the Public Service Loan Forgiveness (PSLF) program harder to access, experts say. At one point in 2019, while Trump was still in office, the Education Department rejected 99% of PSLF applications, according to a report from the Government Accountability Office.

Project 2025 goes even further, calling for the program first introduced by Republican President George W. Bush in 2007 to shutter.

However, Trump would struggle to eliminate PSLF entirely, because Congress originally authorized it by law. Congress would have to act to remove or alter the program, which is still unlikely.

The Education Department probably isn’t going anywhere

Trump has repeatedly reaffirmed his desire to shut down the Education Department, which is responsible for key student loan functions, like overseeing the Free Application for Federal Student Aid (FAFSA) and maintaining the student aid portfolio. He could reassign federal student loans to the Treasury Department, according to Project 2025.

Thompson says she “highly” doubts that Trump will succeed in dissolving the Education Department, because it would be a very large lift and would require Congress to cooperate.

“There are these core functions that millions and millions of people rely on every year and that are legally and statutorily required. And so in order to really do that, you would need a really significant commitment of political resources,” Thompson says. “I think that it's very unlikely, given the margins that we're looking at in terms of Republicans in Congress, in both the House and Senate, are quite small.”

College alternatives poised to expand

Trump has spoken in support of college alternatives, and his administration could increase investment in trade schools, community colleges, bootcamps and for-profit career-training programs. His platform says it “will support the creation of additional, drastically more affordable alternatives to a traditional four-year College degree.”

“This has been a bipartisan conversation for quite a while, I think we certainly are also seeing a fair amount of interest among the public, given the rising costs of college, given student debt and the reality of student debt, and also given the desire for people to have different pathways available based on their interests and where they want their futures to go,” Thompson says.

Expect more conversation about allowing students to use the need-based Pell Grant to pay for short-term career training programs, Thompson says. This federal grant gives students from low-income backgrounds up to $7,395 per year.

Borrower protections could decrease

Trump's Education Department plans to “reassess the basis for and soundness of the Department’s borrower-defense regulations,” Acting Solicitor General Sarah Harris wrote in a document filed to the Supreme Court on Jan. 24, 2025. Borrower defense to repayment is a longstanding program introduced in 1995 to discharge debt for borrowers who have been defrauded by their schools. Harris also asked the Supreme Court to pause briefings in a case evaluating a streamlined borrower defense application process.

Historically, Trump has acted to limit protections for defrauded student loan borrowers. For example, in 2020, then-President Trump vetoed a bipartisan resolution that would have overturned a 2019 borrower defense rule that made it tougher for students who say they were defrauded by colleges to get federal student loan discharge.

Project 2025 calls for Congress to end the Education Department’s broad ability to forgive loans through the borrower defense program. Instead, it says, the Department should only be allowed to discharge loans in limited situations in which “convincing evidence exists to demonstrate that an educational institution engaged in fraud toward a borrower in connection with his or her enrollment in the institution and the student’s educational program or activity at the institution.”

How student loan borrowers can prepare for the Trump presidency

Student loan borrowers don’t yet have a clear roadmap of how the next four years will play out. However, there are still limited steps you can take to prepare for changes to the student loan system:

Keep detailed repayment records and take screenshot of your payment count

Keep records of any payments and conversations with your servicer. If any issues arise down the road, you can refer to these records and use them to file a student loan complaint.

You should also take screenshots of your new payment count in your studentaid.gov account ASAP, says Persis Yu, deputy executive director of the Student Borrower Protection Center. This feature appeared in borrowers' accounts in mid-January, when the IDR waiver wrapped up.

Do this as soon as possible; it's possible that the Trump administration will remove the new payment count feature from your account. Having a screenshot gives you evidence of your progress toward IDR forgiveness or PSLF, even if your servicer makes an error in the future.

"Because not all time counts, it is extremely difficult for borrowers to calculate their own IDR payment count," Yu says. "By capturing this data, borrowers can ensure that they have concrete evidence of the progress they have made towards cancellation, regardless of what happens next."

Consider changing your student loan repayment plan

For now, SAVE borrowers are still in an interest-free payment pause...but the plan isn’t likely to stick around for long with Trump in office. If SAVE disappears and you need lower payments based on your income, or you want to work toward loan forgiveness, IBR or PAYE are the safest options, Thompson says.

Consider the decision to switch plans carefully. Your monthly payments will likely increase if you switch from SAVE to another IDR plan. And, the IBR plan requires a partial financial hardship to apply, which may block higher-income borrowers from enrolling.

IBR, PAYE and the Income-Contingent Repayment (ICR) plan are currently enrolling borrowers, and servicers are processing IDR applications again.

» MORE: How to apply for an income-driven repayment plan

Pay attention to loan forgiveness news

At this point, you shouldn’t yet worry about forgiveness you have already received or make financial decisions with the assumption that it will be taken back, Thompson says.

However, keep an eye on the news and any official announcements from the Trump administration. The situation could change.

Submit the FAFSA ASAP

The Education Department opened the 2025-26 FAFSA to all students on Nov. 18. If you’ll be in college next year, submit the form as soon as possible to avoid any potential processing delays that could happen as a result of the changing administrations.

Be critical of for-profit education programs

While the Trump administration may work to make college alternatives more accessible, do your research about potential programs before committing to them. Some programs, particularly those offered by for-profit institutions, can be predatory.

“When a program is eligible [for federal student aid], it’s a powerful signal to somebody that that should be a valid and worthwhile thing that will pay off for them, but unfortunately we have seen in the past that that is not always the case, which then leads to a lot of the student debt outcomes that, frankly, undermine the trust in higher education for people,” Thompson says.

The Education Department’s College Scorecard tool is one way to evaluate the financial outcomes of various institutions and post-secondary pathways.

Contact your local representative

If you’re concerned about proposed changes to your federal student loan repayment options, consider reaching out to your U.S. senators or house representative. Elected officials often take their constituents’ opinions into account when making policy decisions.

Find out how to contact your elected officials at USA.gov.