What Would a Trump Presidency Mean for PSLF and Student Loans?

Student loan policies shift depending on who is in the White House. With a potential Trump presidency, borrowers are wondering what changes could come to programs like Public Service Loan Forgiveness (PSLF) and broader student debt relief.

Predicting exact outcomes is difficult, but past actions and campaign rhetoric offer clues. Understanding these potential shifts is important for borrowers planning their financial future.

Current State of PSLF and Student Loans

Public Service Loan Forgiveness (PSLF) allows borrowers in government and nonprofit jobs to have federal student loans forgiven after 120 qualifying payments. Recent changes, including the Limited PSLF Waiver and IDR Account Adjustment, temporarily expanded eligibility and corrected past servicing errors. These measures helped many borrowers receive forgiveness sooner, but as of 2024, the waiver has ended, and the program has returned to its original structure.

Income-driven repayment (IDR) plans, tied to PSLF, have also changed. The Biden administration introduced the Saving on a Valuable Education (SAVE) plan, replacing Revised Pay As You Earn (REPAYE). SAVE lowers payments for many borrowers, capping undergraduate loan payments at 5% of discretionary income, down from 10%. Borrowers with original balances of $12,000 or less can receive forgiveness after 10 years instead of 20 or 25, making repayment more manageable.

Loan servicer transitions have caused issues. MOHELA is now the sole servicer handling PSLF applications after FedLoan exited, leading to processing delays and customer service problems. The Department of Education has acknowledged these challenges and is working on improvements.

Potential Policy Changes Under a Trump Presidency

A second Trump administration could bring major changes to federal student loan policies. During his first term, Trump proposed eliminating subsidized loans and ending PSLF for new borrowers, arguing these programs burden taxpayers. While these proposals did not pass, they indicate a broader effort to reduce federal involvement in student lending.

One possible shift is restructuring income-driven repayment (IDR) plans. Trump’s 2020 budget proposed consolidating IDR plans into a single option with higher monthly payments but a shorter path to forgiveness. Borrowers would have paid 12.5% of discretionary income—higher than the current 5% or 10% under SAVE—but received forgiveness after 15 years for undergraduates and 30 years for graduate borrowers. If a similar plan is revived, borrowers could face higher monthly costs.

The Biden administration has implemented targeted debt relief, including cancellation for borrowers defrauded by for-profit colleges and those facing long-term repayment challenges. Trump has criticized broad cancellation efforts, calling them unfair to taxpayers who did not attend college or already repaid their loans. A second Trump term would likely take a stricter stance on new forgiveness initiatives, potentially limiting eligibility or rolling back recent expansions.

Loan servicing and oversight could also change. The Biden administration increased regulatory scrutiny of servicers, holding them accountable for errors. A Trump administration may loosen these regulations, favoring a more market-driven approach. This could mean fewer borrower protections, making it harder to dispute errors or receive timely corrections. Reduced oversight could also lead to more servicing issues, such as delays and misapplied payments.

Impact on Borrowers and Loan Forgiveness

Borrowers under a second Trump administration could see repayment terms become less flexible. If IDR plans are restructured, monthly payments could rise, making budgeting more difficult, especially for lower-income individuals. Those who planned their finances around existing forgiveness timelines may need to reassess repayment strategies if forgiveness thresholds change.

A rollback of borrower protections could also create uncertainty. The Biden administration increased enforcement to prevent loan servicers from engaging in deceptive practices. A shift away from these measures could make it harder to dispute errors, increasing the risk of missed payments or delays in qualifying for forgiveness.

For public service workers, changes to PSLF could impact career decisions. If new restrictions limit eligibility or extend the number of required payments, some borrowers might reconsider public sector jobs, particularly if PSLF benefits diminish. This could affect workforce retention in fields like education, healthcare, and government, where PSLF has long served as an incentive.

Economic Implications of Policy Changes

Changes in student loan policies affect consumer spending, labor markets, and government budgets. Higher monthly payments reduce disposable income, which could slow growth in industries like retail and travel. Reduced federal involvement in student lending may lower government expenditures, potentially affecting funding for education and social programs.

Loan repayment terms also shape financial decisions. If borrowers face longer repayment periods or higher costs, they may delay homeownership or entrepreneurship. First-time homebuyers, many of whom have student debt, could struggle to qualify for mortgages due to higher debt-to-income ratios. Small business formation could also decline if borrowers allocate funds toward loan payments instead of startup costs.

Comparison with Previous Administration’s Policies

A potential Trump presidency would likely take a different approach to student loans than the Biden administration. While Biden expanded relief efforts and introduced more borrower-friendly repayment options, Trump’s previous proposals focused on streamlining programs and reducing federal spending on student debt.

One key difference is loan forgiveness. The Biden administration has used executive authority to cancel billions in student debt through borrower defense claims, PSLF adjustments, and IDR recalculations. Trump, in contrast, sought to eliminate PSLF for new borrowers and proposed ending subsidized federal loans, arguing these programs encouraged excessive borrowing. If a second Trump term follows this pattern, broad cancellation efforts would likely be curtailed, and forgiveness programs could become more restrictive.

Regulatory oversight of loan servicers also shifted between administrations. Under Biden, the Department of Education increased enforcement actions against servicers for mismanagement. Trump’s administration took a more hands-off approach, emphasizing efficiency over strict compliance measures. A return to this deregulatory stance could ease operational burdens on servicers but may also reduce borrower protections, making it harder to resolve disputes or correct repayment errors.