Trump officials move to scrap Biden student-loan repayment plan | Trump administration
Donald Trump’s administration announced on Tuesday it had reached a settlement with several Republican-led states to end Joe Biden’s student loan repayment program, which has helped millions of borrowers repay their debt.
On Tuesday, the education department announced plans to halt what it called Biden’s “illegal” Save plan – the Saving on a Valuable Education income-driven repayment program which currently has more than 7 million borrowers.
In a press release, the education department said it plans to stop all new Sve enrollments, deny any pending applications and transition existing borrowers into alternative repayment plans.
If the settlement is approved by the US district court for the eastern district of Missouri, borrowers will be given a limited window to choose a new option before the department automatically moves them out of the program.
“For four years, the Biden administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing administration,” education under-secretary Nicholas Kent said.
“The Trump administration is righting this wrong and bringing an end to this deceptive scheme. The law is clear: if you take out a loan, you must pay it back,” he added.
Catherine Hanaway, Missouri’s Republican attorney general, whose state joined Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma in suing the Biden administration last March over claims that Save was too generous and illegal, said: “Our office fought for hardworking Americans who were being preyed upon by Biden administration bureaucrats, and we won in court every time.”
She added: “Unilaterally saddling taxpayers with someone else’s Ivy League debt ignored congressional authority and was clearly unlawful. We appreciate president Trump’s real, long-term solutions instead of illegal student loan schemes.”
Biden’s Save program, widely regarded as one of the most generous student loan repayment plans in US history, lowered some borrowers’ monthly payments to as little as $0, cut required payments on undergraduate loans by half, and offered early forgiveness for those with low balances.
However, several Republican-led states have argued that the administration overstepped its authority by setting these repayment terms and canceling debt without congressional approval.
In response to Tuesday’s announcement, Persis Yu, deputy executive director of Protect Borrowers, a group focused on investigating financial abuses and advocating for debt protection policies, said: “While millions of student loan borrowers struggle amidst the worsening affordability crisis … billionaire education secretary, Linda McMahon chose to strike a back-room deal with a right-wing state attorney general and strip borrowers of the most affordable repayment plan that would help millions to stay on track with their loans while keeping a roof over their head.”
Similarly, Natalie Abrams, president of the Student Debt Crisis Center said: “Today’s decision from the department of education is devastating for the nearly 8 million student loan borrowers who depended on the Save plan to keep their payments affordable. Borrowers have endured years of uncertainty, and this only exacerbates the confusion and financial strain they are already facing.”
“Borrowers need real relief and stability, not a return to unaffordable, costly student loan payments that push them closer to financial crisis,” Abrams added.
More than 43 million Americans – roughly one in six adults – currently carry federal student loan debt, which has climbed past $1.6 trillion.
In November, the American Enterprise Institute found that 12 million borrowers were behind on their payments. Of these, 5.5 million are in default, mostly borrowers whose loans went into default before the pandemic, while an additional 6 million are behind on their payments.
