Student loan borrowers navigate new landscape as options dwindle under Trump
The recently passed 'big, beautiful bill' will take the bevy of choices away from borrowers by 2028, leaving only two options for repayment.
Those on the Biden administration's Saving on Valuable Education (SAVE) plan who have been in forbearance have even less time, with interest accrual restarting next month.
Student loan advocates are encouraging borrowers to reach out for help in understanding their options as they fear many will not be able to afford their monthly repayment plans with the plans left for them.
'It feels like a flood-the-zone type situation where confusion is part of the intent,' said Natalia Abrams, president of the Student Debt Crisis Center (SDCC), adding, 'the hits just keep coming.'
The slate of changes rolled out, she said, 'feels reckless in terms of treatment towards student loan borrowers and for Americans at large.'
After years of pauses, on-ramps and forbearances from the start of the pandemic in President Trump's first term through the Biden administration, the White House is now requiring all borrowers to begin repaying their loans by the end of Trump's second.
The millions of borrowers on the SAVE plan have been in forbearance with no interest since that Biden program was ruled illegal by the 8th U.S. Circuit Court of Appeals last year. The SAVE plan made it so some borrowers had to pay as low as $0 a month.
The government said those in the SAVE plan will have to switch to a different option for payments to start counting towards their loan forgiveness, but people can stay in the plan and just pay interest potentially until summer 2026.
An analysis from the Student Borrower Protection Center found the typical borrower will pay more than $3,500 in interest charges per year due to the policy change.
The decision to switch out of the plan by Aug. 1 or just pay the interest is a personal one.
'Every single borrower's financial situation is so different. For borrowers who are truly unable to afford to make payments, remaining on the SAVE forbearance might be their best option,' said Aissa Canchola Bañez, policy director for the Student Borrower Protection Center.
'But for borrowers who are on the SAVE forbearance' but want to take advantage of the Public Service Loan Forgiveness Program, 'it's been our advice that folks should try to get off of SAVE so that they can begin making payments and begin earning credit towards' forgiveness, she added.
Experts also advise those leaving SAVE to wait until the Aug. 1 deadline so the interest is taken care of 'throughout the entire month of July' and a borrower does not get on the hook for it with a new plan, Abrams said.
Over the next three years, all borrowers will be forced into the two repayment options that were passed under Trump's 'big, beautiful bill.'
The act only leaves borrowers with a standard repayment plan, which includes 10-25 years of repayments depending on the loan amount, and a new Repayment Assistance Plan (RAP), which takes into account a person's income but lengthens the amount of time spent on repayment.
RAP is 'based on their income. Low-income borrowers can make payments as low as $10 a month, but unlike past income driven repayment plans, they're going to have to repay on their loans for longer. The span soon will be 30 years … So [the department is] making things simpler, they're trying to make things easier and they're trying to prevent students from being burdened with excessive debt,' said Angela Morabito, spokesperson for the Defense of Freedom Institute.
The Trump administration and conservatives argue the policy changes are 'compassionate,' saying borrowers agreed to these loans and have to pay them back.
'No one should be panicking over this. This is a really thoughtful and strategic and compassionate way to try and solve the student loan crisis that the past administration, quite frankly, made so much worse,' Morabito said.
'The fact of the matter is, whenever you take out a loan, no matter what loan it is, you agree to pay it back. Borrowers made that agreement. They need to pay their loans back. They've had a long break, if anything, should make repayment easier that they've had so much time to plan and prepare,' she added. 'But if anyone was under the impression that they would just never have to pay loans back, that's because they were lied to by people who don't have the best interests of students and taxpayers at heart.'
Others advocates, however, predict the changes will devastate some borrowers, with more defaults on the horizon and misinformation making it hard to navigate the situation.
One of the biggest concerns for borrowers is the backlog of almost 2 million applications for the income-driven repayment programs as the administration pushes students to sign up for these options.
The backlog began under the Biden administration, and resumption of application processing only restarted in April of this year.
'The Biden Administration failed to process income-driven repayment applications for borrowers, artificially masking rising delinquency and default rates and promising illegal student loan forgiveness to win points with voters. The Trump Administration is actively working with federal student loan servicers and hopes to clear the Biden backlog over the next few months,' said Ellen Keast, deputy press secretary for the Education Department.
Student loan advocates are encouraging borrowers to reach out to nonprofit organizations and the federal government when figuring out their next steps, as scams abound.
Even experts on the issue have struggled to understand the new landscape as the federal government said other student loan repayment options will phase out between the summer of 2026 and the summer of 2028, but it isn't clear what those two years will look like for borrowers or when it would be most advantageous for borrowers to leave their current plans.
'Borrowers are feeling so much anxiety right now. The bill makes ginormous changes to our student loan system. It very much feels like there's no clear answer on what borrowers can or should be doing right now,' Bañez said.
While those advocating for broader student loan forgiveness don't see much cause for hope under the Trump administration, they were encouraged the GOP legislation did not take away the future possibility of debt relief, potentially under a different administration.
'The only other small silver lining … is they were able to get rid of the piece [in the Senate bill] where they were trying to take away the secretary's ability to cancel student loans or make big changes to the student loan program. That got thrown out in the bird bath and so … [there is] a little bit of hope that we can pull to actually change these very bad policies that have been done' in the future, Abrams said.
Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
8 minutes ago
- Bloomberg
US Core CPI Rises Less Than Expected for Fifth Month
00:00 We've got an upside surprise here that kind of makes a little hash of perhaps the treasury secretary's claim that inflation hasn't hit yet. CPI comes it up 3/10 of a percent. The downside surprise, though, is in the core, up just 2/10 of a percent. Both were up a 10th of a percent last month. Year over year we go to 2.7%, which is higher than the anticipated 2.6%. It's a 3/10 percent move up from last month. And core is at 2.9%. That is what was expected last month. It was 2.8%. Let me just quickly mentioned empire manufacturing. It goes up 22 points to a positive 5.5 important because that's July number one of the first July numbers we get. And it is the first time it's been positive since February. Prices paid, though, went up.
Forbes
10 minutes ago
- Forbes
How To Structure Cross-Department Collaboration
Dustin Lemick, founder and CEO of BriteCo, an innovative insurance technology company transforming the retail jewelry insurance experience. We've all heard the sayings 'There's strength in numbers' and 'There's no 'I' in team' repeatedly. But there's a reason these statements continue to resonate and appear on motivational posters that decorate so many offices: because they're true. There are few (if any) businesses that have gotten off the ground with just one person. The fact that a business is referred to as a 'company' is telling. We need partners, collaborators, investors and workers to help bring life to an idea. But beyond just having people at your side, it is important to build a strong team and ensure they all work well together. In my experience as a founder and CEO, establishing and encouraging cross-department collaboration is especially important for fast-growing, growth-phase companies when everything is moving fast and many initiatives are launching simultaneously. Key opportunities and important details can get missed if every department is not on the same page and continually communicating and sharing knowledge. With that in mind, here are three valuable lessons I've learned over the years that you can use to create a solid cross-department team culture. 1. Full-team meetings are important. Consider having 'standup' meetings once a week where the entire staff (leadership and upper management included) meet and share updates, both big and small. This creates a regular opportunity for teams to come together to applaud everyone's efforts and learn what everyone is working on, what developments are happening and where they can support each other. My company amplifies this further with an annual 'all hands' gathering, during which different departments share presentations about achievements, new projects and ideas they may want to get off the ground in the near future. I've found that this route can also grow team members' confidence that everyone is moving in the same direction and that their role is critical to the effort. 2. Teams can grow each others' knowledge. The more knowledge and understanding each employee has about the organization, its current and upcoming projects and its future goals, the more ammunition they have to do their job well. For example, if someone on your marketing team is trying to navigate the intricacies of AI to help them come up with new content ideas, it may be helpful for them to ask the tech team about what they are doing to input AI into the company's processes. This could also lead to conversations with other departments about how best to leverage the growing technology in their own roles. Encouraging this kind of cooperation can help translate team members' best-in-class knowledge across departments. 3. Everyone's role is everyone's business. One great program we have at my company is "job shadowing": Employees are assigned to watch a colleague while they work and ask them questions so they can gain perspective on the different roles in the organization. Consider having your employees log a certain number of job shadowing hours every year with as many departments as possible. Also, encourage team members to attend any open meetings they see on the calendar if they want to learn more about the related topic or project. I've found that fostering this type of positive, open culture results in everybody talking to each other and keeping lines of communication open, both of which are important for the success of a healthy organization. 4. Keep your door open. A key part of successfully creating a cross-department collaborative culture is ensuring the management team is invested. This means being open and communicating effectively with team members at all levels of the organization. For example, every time you hire someone new, tell them that you have an open-door policy—and truly mean it. Your team should know they can approach you anytime to ask questions, share ideas or get feedback, and trust that you'll provide open-book responses. I also recommend ensuring that your onboarding process is very comprehensive so new employees can access all the information they need from day one. Consider scheduling one-on-one meetings with new hires' coworkers in and out of their department, and provide a robust library of educational tools that present a detailed roadmap of your company. 5. See where there's room to improve. To keep fostering cross-department collaboration, it's equally important that you continually evaluate the strategies and procedures you've put in place and look for areas where there is room for improvement. For example, while we have had a number of these processes in place for years, our company recently decided that we should launch an employee recognition program. The program incentivizes everyone to know the intricacies of their colleagues' roles and to provide acknowledgment when a job is well done. Employees get a monthly balance of 'points' that they can give to different coworkers or departments, who can then redeem the points for rewards. Final Thoughts When it comes to fostering a collaborative culture, I have found that quality is more important than quantity. Consider starting with something like reducing the number of less-productive single-department meetings in favor of fewer, more imperative group discussions where key players from different departments can be part of the conversation. When everyone is able to work together without the restriction of departmental boundaries, you can create true harmony between your teams. Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
New York Post
10 minutes ago
- New York Post
US inflation heats up to 2.7% — a possible sign that Trump tariffs have begun to sting
US inflation ticked up in June in a possible sign that President Trump's tariffs are starting to sting. The Consumer Price Index rose 2.7% in June from the year before, matching economists' expectations but coming in above the previous month's 2.4% reading, the Bureau of Labor Statistics said Tuesday. US inflation rose in line with forecasts in June. Stephen Yang Core CPI, which excludes volatile food and energy prices, gained 2.9% from a year earlier, above the previous month. On a month-to-month basis, headline inflation rose 0.3%, in line with forecasts but above the previous month's 0.1% jump. The indexes for used cars and trucks and new vehicles were among those that saw the most substantial declines in June, according to the Bureau of Labor Statistics. That came as a surprise for economists, who were calling for upticks in auto and apparel prices — two of the sectors that are hardest hit by tariffs. This story is developing. Please refresh for updates.
