Student loan borrowers may face higher payments under Trump

• Consumer advocates are worried about the fate of the U.S. Department of Education's new affordable repayment option for borrowers, known as SAVE, under President-elect Donald Trump.
• That program was supposed to cut in half monthly bills for millions of federal student loan borrowers.

President-elect Donald Trump has made his dislike for student debt relief clear. Experts expect he will abandon or roll back many of the Biden administration's student loan efforts — which on the campaign trail he called "vile" and "not even legal."

Assuming the Trump administration abandons the U.S. Department of Education's new affordable repayment plan, known as SAVE, borrowers enrolled in it will have to shift to a different repayment plan with significantly higher monthly payments.

SAVE was supposed to cut in half monthly bills for millions of federal student loan borrowers.

"For those worried about SAVE going away, I think it probably will, unfortunately," said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.

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SAVE has already been temporarily suspended by a federal court, after legal challenges brought by Republican attorneys general in Kansas and Missouri. In the meantime, the Biden administration has put SAVE enrollees into an indefinite administrative forbearance in which they don't owe anything on their debt.

When Trump returns to the White House in January, borrowers enrolled in SAVE should be prepared for that forbearance to come to an end, said Malissa Giles, a consumer bankruptcy lawyer in Virginia.

The incoming administration is "not bound by the position of the prior administration," Giles said.

If the Trump administration doesn't continue to defend the SAVE plan in court or the Republican-controlled Congress scraps it entirely, borrowers are likely to see their bills revert to their prior levels, Giles said. For some, bills could be double what they would have paid under SAVE.

"I cannot imagine the stress that will be put on folks," Giles said.

President Joe Biden rolled out the SAVE plan in the summer of 2023, describing it as "the most affordable student loan plan ever." SAVE replaced the Education Department's former REPAYE option, or Revised Pay As You Earn plan.

Around 8 million borrowers signed up for the new income-driven repayment, or IDR, plan, according to the White House.

Under IDR plans, borrowers' monthly payments are set based on a share of their discretionary income. They receive forgiveness after a certain period, typically 20 years or 25 years.

The SAVE plan had the most generous terms to date.

Instead of paying 10% of their discretionary income a month toward their undergraduate student debt, as they did under REPAYE, borrowers needed to pay just 5%. Those who earned less than roughly $15 an hour had a $0 monthly bill, and borrowers with smaller balances were entitled to loan forgiveness on an expedited timeline — in as little as 10 years.

Republican-backed states argued that the Biden administration overstepped its authority with SAVE, and was using the plan as a roundabout way to forgive student debt after the Supreme Court blocked its sweeping loan cancellation plan last year.

Before the legal challenges, the Education Department had already forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE Plan.

Proponents of the relief plan argue that student loan borrowers need more affordable repayment options. Nearly a third, 30%, of the borrowers say they've gone without food, medicine or other necessities because of their monthly bills, according to a new survey by the Consumer Financial Protection Bureau.

More people will be forced to make these hard decisions if SAVE goes away, Giles said.

"What challenges are people going to [face] when their payments double?" she said. "It's a crazy hot mess."