As Donald Trump prepares to return to the White House, millions of Americans who were counting on the government to forgive their student loan debt are now worried they may be left high and dry without any relief.
And rightfully so. Experts and analysts say the future of student loan debt forgiveness is very much in jeopardy with the incoming Trump administration. While President Joe Biden repeatedly promised and took action to reduce or eliminate debt for 40 million student loan borrowers, Trump has called those efforts "a total catastrophe."
"The U.S. Department of Education's work to cancel student debt for tens of millions of Americans will likely come to a halt with the election of Donald Trump," Annie Nova reported for CNBC. "The Biden administration's latest student loan forgiveness efforts, which became known as Plan B after the Supreme Court blocked its first attempt, will likely fail in court without Biden administration attorneys fiercely defending it."
While Trump hasn't revealed any specific details for how he plans to tackle the growing mountain of student loan debt that Americans owe, currently around $1.74 trillion, he has vowed to eliminate the Department of Education, the loan holder of about 94% of that debt, and let the states run their education systems.
That puts a lot of people -- roughly 42.8 million, or 1 in 6 adult Americans -- who were hoping to see their student loan repayments reduced or eliminated in limbo about what to expect in the future.
Mike Pierce, executive director of the Student Borrower Protection Center, pointed to Trump's first term as a glimpse of what may be to come.
"In his first administration, Trump's Department of Education ignored federal law and refused to cancel the debts of students defrauded by their schools. Trump's Consumer Financial Protection Bureau adopted a 'pencils down' approach, curtailing enforcement and civil penalties against bad actors," Pierce said in a statement. "When states stepped in to protect their residents from unlawful student loan servicers, the Trump Administration argued that federal law barred them from doing so."
According to Trump's platform, Republicans will "support the creation of additional, drastically more affordable alternatives to a traditional four-year college degree" and "fund proven career training programs" while "reducing" higher education costs. But without specific initiatives, some believe Trump remains a threat to borrowers.
"President-elect Trump's dark vision for millions of American families with student debt is as extreme," Pierce said, "dismantling the U.S. Department of Education, undoing hard-fought protections for student loan borrowers, driving millions into the open arms of predatory for-profit schools and private lenders, and leaving millions drowning in student debt. The threat posed by these plans is real and will imperil the financial stability of millions of working families."
According to a pre-election survey from Bankrate, more than 1 in 4 Americans (29%) say that student loan debt is a national crisis, with the percentage increasing to 46% among those currently in debt. Furthermore, 27% say the federal government has not done enough to provide financial assistance to borrowers (i.e. forgiveness, deferment, etc.); that rises to 35% among individuals with existing debt.
The survey also shows that nearly 1 in 4 of those who currently have student loan debt say they're having trouble affording their monthly payments since October 2023 (24%), when the pandemic-era forbearance period on federal student loans came to an end. Similarly, almost 1 in 4 of current student loan debt holders say they have gone at least one month without paying their federal student loans since payments resumed in 2023 (24%), according to Bankrate.
"For the Americans saddled with debt to pay for their own education, student loans have been seen as the price they have to pay to compete for well-paying jobs in an increasingly selective and competitive U.S. labor force," Bankrate Analyst Sarah Foster said in a statement.
Although 39% of current borrowers say they expected to fully repay their loans themselves when they borrowed money for their education, 24% of those with student loan debt say they do not expect they will ever be able to pay it off, the survey shows. This sentiment rises with age, with 27% of Gen Xers and 26% of millennials saying so, versus 14% of Gen Zers who currently have student loan debt.
"If you're struggling to afford your student loan payments, remember to consider the options that are already out there for you before halting your repayments altogether," Foster said. "You might be able to lower your monthly payment if you enroll in an income-driven repayment plan, an arrangement that could also lead to forgiveness down the road."
The Bankrate survey found that just 10% of those who currently have student loan debt say their balance, or at least a portion of it, has already been
forgiven.