Trump's victory brings uncertainty for borrowers hoping for student loan forgiveness

Cheyanne Mumphrey
| Associated press

Savannah Britt owes about $27,000 on loans she took out to attend Rutgers University, a debt she hoped would be reduced by President Joe Biden’s efforts to forgive his student loans.

Her payments are currently on hold while the courts clear up the problems with the loan forgiveness program. But as the weeks of Biden’s term wind down, she could soon be looking at a monthly payment of up to $250.

“With this new government, the dream is over. It’s over,” said Britt, 30, who runs her own communications agency. “I was hopeful before Tuesday. I was waiting for the trial. Even my mother has a loan that she took out. She owes about $18,000, and she was in the process of getting forgiven, but it’s at a standstill.”

President-elect Donald Trump and his fellow Republicans have criticized Biden’s efforts to forgive loans, and lawsuits by Republican Party-led states have halted plans for widespread debt forgiveness. Trump has not said what he would do when it comes to loan forgiveness, leaving millions of borrowers facing uncertainty about their personal finances.

The economy was a key issue in the election and helped propel Trump to victory. But for borrowers, concerns about their finances extend beyond inflation to include their student debt, said Persis Yu, managing counsel of the Student Borrower Protection Center.

“That’s a big part of what makes life unaffordable for them, the burden of costs that they can’t seem to get out of,” Yu said.

Student loan cancellations were not a focus of the campaign, either for Trump or Vice President Kamala Harris, who avoided the issue at her political events. The issue came up only once during the presidential debate in September, when Trump criticized Harris and Biden for failing to deliver on their promise of widespread forgiveness. Trump called it a “total catastrophe” that “mocked young people.”

Biden promised the student loan cancellation program during his bid to become president. From its launch, Biden’s loan forgiveness faced brutal pushback from opponents who said it benefited elites at the expense of those who paid off their loans or didn’t go to college.

Biden’s first plan to cancel up to $20,000 for millions of people was blocked by the Supreme Court last year. A second, more limited plan has been halted by a federal judge after Republican-led states filed a lawsuit. A separate policy intended to lower loan payments for struggling borrowers has been suspended by a judge, even after Republican-controlled states challenged it.

Bob Eitel, who served as a senior adviser to the education secretary during the first Trump administration, said he expects the president-elect to take steps to rescind the loan cancellations.

“The Trump administration may pursue various options for loan relief, but it will not be the massive form of forgiveness that the current administration has pursued,” said Eitel, president and co-founder of the Defense of Freedom Institute for Policy Studies.

Overall, Biden’s efforts were relatively unpopular, even among those with student loans. Three in 10 American adults said they approved of Biden’s handling of student loan debt, according to a poll this spring from the University of Chicago Harris School of Public Policy and the Associated Press-NORC Center for Public Affairs Research. Four in ten disapproved. The others were neutral or didn’t know enough to say anything.

Even without directly addressing student loans, Trump has made promises that would impact them. He has pledged to abolish the U.S. Department of Education, which manages the $1.6 trillion portfolio of federal student loans. It is unclear which entity would assume that responsibility if the department were eliminated, which would require congressional approval.

“The American people re-elected President Trump by a wide margin, giving him a mandate to implement the promises he made during the campaign. He will make it happen,” said Karoline Leavitt, spokesperson for the Trump-Vance transition.

Yu noted that the Biden administration has managed to cancel the student loans of about 5 million borrowers even as the forgiveness effort has been blocked. The government did this by taking advantage of loan cancellation programs that were already in place. For example, an existing student loan forgiveness program for public sector workers has provided relief to more than 1 million Americans, up from just 7,000 that were approved before it was updated by the Biden administration two years ago.

“A lot of the cancellations we’ve seen in recent years have been because the Biden administration was committed to making the programs actually written into law work for people,” Yu said.

Sabrina Calazans, 27, owes about $30,000 in federal student loans from her college days at Arcadia University in Pennsylvania. Her payments have also been suspended, but she could soon see a monthly payment of more than $300.

“As a first-generation American, I live at home with my family, contribute to our household finances, and that payment means a lot to me and so many others like me,” said Calazans, who is originally from Brazil.

In her role as director of the Student Debt Crisis Center, Calazans said she told people to stay informed on developments by using the loan simulator on the Federal Student Aid website and reading updated information about forgiveness qualifications and repayment programs.

“There is a lot of confusion about student loans,” Calazans says, and not just among young people. “We see that many parents are taking on more debt to send their children to school. We see older people going back to school and also having to take out loans.”

Associated Press education writer Collin Binkley in Washington, DC. contributed to this report.