Student loan debt may be tougher to pay off and expand the wealth divide after passage of Trump's big bill

Boston Globe

6 days ago

'I'm at an age when people are advancing in their careers, starting families, buying houses,' she said. '[The debt] takes a huge emotional and financial toll. I'm very pro-active, I create budgets. On every spreadsheet, I have to budget for this dark cloud.'
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German Roman is one of the
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Recent efforts by the Trump administration and Republican-led Congress to restrict access to federal student loans may further deepen these disparities. By limiting funds historically under-represented communities have relied on, students of color and women may be pushed toward private lending, or skip higher education altogether.
As part of the 'Big Beautiful Bill,' signed by President Trump on July 4, federal loans for medical and law students will be capped at $200,000, below
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The bill also limits repayment options, with fewer flexibilities, restricted pathways to debt forgiveness, and faster repayment requirements.
According to the Student Borrower Protection Center, an advocacy and research group, all students, regardless of income or whether they've completed their degree, will face higher monthly payments as a result of these changes.
Outside of the legislation, the Trump administration
The Student Debt Crisis Center, a separate advocacy group, estimates these fees will amount to about $300 a month. Already 5 million Americans have defaulted on their student loans, with another 2 million projected to default this month. Natalie Abrams, president and founder of the debt crisis center, now expects these numbers to grow.
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'This is a bad bill for borrowers,' she said.
Advocates who have been raising alarm bells for years about rising student debt are now stuck in a strange position: Advocating for federal loans to continue, while also calling for major changes to the system through debt cancellation and lowered tuition.
On its face, the Republican-led changes seem to acknowledge concerns about the country's
But critics counter that in the face of federal loan caps, borrowers will rely on higher-priced, more risky private loans, or skip school altogether.
Borrowers of color, who have less family wealth to tap into and are therefore more reliant on student loans, will be hurt the most.
Student debt diminishes the ability of historically under-represented communities to build generational wealth, diverting money that could go toward savings, retirement, or investing in big-ticket items that traditionally fuel family wealth, such as homes.
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'Generations of systemic racism have forced Black and brown folks — especially Black women — to borrow at higher rates than our white peers and bear an enormous financial burden, denying us the opportunity to succeed and build generational wealth,' Representative Ayanna Pressley told the Globe
in an emailed statement.
Changes by the Trump administration,
while reducing a reliance on federal student loans, could actually
worsen the divide. Lending limits 'means fewer people who are not already rich will be able to go to college, and the people who still need to get education and training that are not already rich are going to be targeted for predatory private loan projects,' said Eileen Connor,
executive director
of the Project on Predatory Student Lending, a legal and policy organization focused on predatory for-profit colleges and lenders that started at Harvard Law School.
'There's been a fair amount of talk about Trump policies leading to resegregation,' Persis Yu, deputy executive director and managing council at the Student Borrower Protection Center, an advocacy group that aims to improve the student loan system, said. 'And I think this is part of that project.'
Amina Khamsi will be starting her third year at Boston University School of Medicine this fall. Originally from El Paso, Texas, Khamsi, who is a first-generation immigrant with Moroccan and Colombian roots, has already taken out nearly $120,000 in federal student debt, which has accrued nearly $10,000 in interest.
She's already considering whether she can afford to stay in Boston for residency, and worries doctors will have to reconsider whether they can work in underserved communities, where positions pay less, if they have to take on more private debt.
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'You are forcing people to make decisions not based on ethical practices or how they want to practice medicine, but 'how am I going to cope with this.' I fear in the long run we're going to have less doctors who look like me, who look like a lot of patients across America, and that could have detrimental effects to health care.'
Private lenders seem primed for the potential influx. In the weeks leading up to the legislation's passage, Sallie Mae
calling for caps on federal student lending. The CEO of Navient, a major private student lender,
As students consider their now whittled-down options, German Roman encourages
them to be informed.
She doesn't regret going to college, but she does regret taking on debt, even as she feels she should consider herself lucky, since the $20,000 she owes is half
tuition-free college.
'No one is arguing for the status quo,' said Yu. 'But until there is a real investment in higher education, both on the federal and state level,' millions of students and their families will continue to rely on federal debt, with now-tightened conditions.
'These proposals,' Yu said, 'are going to make the crisis worse, not better.'
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This story was produced by the Globe's
team, which covers the racial wealth gap in Greater Boston. You can sign up for the newsletter
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Mara Kardas-Nelson can be reached at