Some student loan borrowers are seeing their payments skyrocket amid changes to the Education Department under President Donald Trump.
Trump has updated the department’s income-driven federal student loan repayment programs, causing some borrowers to see their monthly payments rise to anywhere from $500 to $5,000.
Why It Matters
Roughly 43 million Americans have some sort of student loan debt. The Education Department reports Americans collectively have $1.5 trillion in student debt nationwide.
In recent weeks, Trump has made efforts to dismantle the department, adding that student loan programs could be moved to different agencies if the department is eliminated. Roughly half of all Education Department workers are being laid off as the agency undergoes major restructuring.
What To Know
Are Income-Driven Repayment Plans Going Away?
The Trump administration has gotten rid of applications for income-driven repayment plans from the federal aid website.
The change occurs as the Eighth Circuit Court of Appeals blocked income-driven repayment plans in its February ruling. That means former President Joe Biden’s SAVE plans and PSLF options are no longer available.
What Changes Were Made To Student Loans?
Now that these income-driven repayment plans are no longer available, borrowers cannot qualify for potential forgiveness or lower monthly payments because of their income or family size.
Since the programs have been paused, any and all payments borrowers make will also not go toward the 120 qualifying payments needed to get them to student loan forgiveness under the PSLF.
How Borrowers Are Impacted
Many borrowers will see monthly payments increase because of the updates for income-driven federal student loan repayment options.
“My payment is going to quadruple,” Ally Rooker said in a TikTok video, adding that her monthly payment is soaring from $250 to $900.
Another TikToker, @AdoreKatieB, otherwise known as Kaitlyn Bradley, revealed that her monthly payment skyrocketed from $250 to $1,025 now that IDR programs are in jeopardy.
The 28-year-old TikToker creator living in Fort Worth, Texas, said she recently received an email from Credit Karma alerting her that her credit score had gone down.
“That is when I noticed that my credit score had dropped almost 150 points,” Bradley, who works as a pharmacist, told Newsweek. “I then went on Nelnet to see that my payment was now four times what I was asked to pay. That is when I made the video. I’ve pretty much had to use my tax refund to pay it.”
Bradley started working in 2021 and currently has three kids in daycare, costing her $700 a week, plus a mortgage payment of $3,000 a month.
“So from all that, you can see why I was in so much shock,” she said.
Meanwhile, student TikToker @ZombieRum posted: “So with the income driven repayment plans just being up and cancelled, do I just need to go ahead and drop out? …I’m thinking about dropping out and then starting again whenever he’s out…”
Another content creator on the platform, @HeyHannah19, said in a video: “I’ve officially been impacted by Trump’s presidency today.”
She explained that because of Trump’s changes, her monthly payment was up by $900.
“I called my loan servicer and said, ‘That’s not going to work.’ And he was like, ‘Yeah, actually every other call I’ve taken today has been people saying the same thing, and we’re just encouraging folks to go into deferment.”
What Happened To Joe Biden’s SAVE Plan?
In February, a federal judge blocked the Biden administration’s SAVE plan, which allowed 8 million borrowers to work toward student loan forgiveness. Since then, Trump’s administration has paused all applications for any IDR plans.
Previously, borrowers enrolled in SAVE were able to ignore their student loan balance for months as the issue was fought over in court. However, forbearance is scheduled to end later this year, with the first payments arriving in December.
What Happened To Public Service Loan Forgiveness?
Trump previously signed an executive order invoking changes to the Public Service Loan Forgiveness (PSLF) program. The order called for Education Secretary Linda McMahon to “ensure the definition of ‘public service’ excludes organizations that engage in activities that have a substantial illegal purpose.”
The PSLF program allows public service employees to have their student loan balances cleared after 10 years of minimum payments.
Who Is Now Eligible For Student Loan Forgiveness?
Based on Trump’s executive orders and federal judge actions, it’s unclear whether millions of borrowers will qualify for student loan forgiveness anymore.
The PSLF program has been severely undermined because of Trump’s order, and the future of the program, as well as SAVE, is in jeopardy.
“The PSLF Program has misdirected tax dollars into activist organizations that not only fail to serve the public interest, but actually harm our national security and American values, sometimes through criminal means,” Trump’s order reads. “The PSLF Program also creates perverse incentives that can increase the cost of tuition, can load students in low-need majors with unsustainable debt, and may push students into organizations that hide under the umbrella of a non-profit designation and degrade our national interest, thus requiring additional Federal funding to correct the negative societal effects caused by these organizations’ federally subsidized wrongdoing.”
What People Are Saying
A spokesperson for the Education Department told Newsweek: “A federal circuit court of appeals issued an injunction preventing the U.S. Department of Education from implementing the Biden Administration’s illegal SAVE Plan and parts of other income-driven repayment (IDR) plans. The Department is working to ensure these programs conform with the 8th Circuit’s ruling, and anticipates the revised form allowing borrowers to change repayment plans to be available as soon as next week.”
Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek: “The Biden-era SAVE repayment plan has been blocked, and as a result, some borrowers are now seeing their loan payments quadruple—no longer being based on income.
“Borrowers should expect higher payments moving forward, which could lead to a surge in defaults and credit score hits. If the Trump administration takes a harder stance on student loan relief, things may become even more challenging for those struggling to repay.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “What we’re currently seeing is the worst-case scenario for student loan borrowers. Not only are the plans introduced in recent years that provided additional student loan repayment and forgiveness options going away, but much of the staff that oversaw these programs and were able to provide assistance to these borrowers have been let go. The result is payments without support of repayment or forgiveness plans are going up, customer service is virtually non-existent, and borrowers feel left out in the cold as these sweeping changes upend their financial lives. It’s challenging on all ends.”
Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek: “Many payments now don’t even cover accruing interest, creating negative amortization where loan balances grow despite regular payments. A particularly troubling aspect is that high-balance borrowers with moderate incomes could end up in perpetual debt if forgiveness timelines are eliminated as proposed in the College Cost Reduction Act.”
What Happens Next
Ryan said borrowers should expect significant default increases in May as millions of borrowers see payments going up by an average of $200 a month.
“Courts may ultimately block some policy changes, but relief would likely come too late for many borrowers already experiencing financial distress,” Ryan said. “Consider locking in current income-driven repayment plans if possible before July 2024 cutoffs, document all communications with loan servicers, and carefully weigh options like strategic default.”
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