When it comes to student loans, former President Donald Trump’s policies left a lasting impact. While not as aggressive as some administrations in forgiving debt, Trump introduced reforms that reshaped how federal student loans are managed. In this blog, we’ll take a closer look at Trump’s legacy on student loans, what changed during his time in office, and how it still affects borrowers today.
1. Ending Federal Student Loan Servicing Contracts
Under Trump, the Department of Education, led by Secretary Betsy DeVos, moved to streamline federal loan servicing.
Key changes included:
- Fewer companies managing federal student loans.
- New contracts aiming to improve customer service.
- A focus on efficiency but criticism over lack of borrower protections.
While the plan promised a simpler system, many borrowers faced confusion due to abrupt changes in their loan servicers.
2. Changes to Borrower Defense to Repayment
One of the most controversial moves was the overhaul of the Borrower Defense to Repayment program.
Originally designed to help students defrauded by colleges, Trump’s administration:
- Made it harder for students to get loan forgiveness.
- Required more proof of financial harm.
- Significantly reduced the number of successful claims.
Critics argue that this left many students, especially from for-profit schools, stuck with unfair debt.
3. Impact on Income-Driven Repayment Plans
Trump proposed consolidating multiple income-driven repayment plans into a single plan.
His plan would:
- Set payments at 12.5% of discretionary income.
- Forgive undergraduate loans after 15 years (compared to the 20-25 years currently).
- Forgive graduate loans after 30 years.
Although these proposals were never fully enacted, they signaled a shift toward streamlining but also limiting forgiveness benefits.
4. Focus on Private Lending and Risk Sharing
Trump’s administration encouraged a return to private lending for student loans.
They pushed the idea that:
- Universities should share financial risks if graduates defaulted on their loans (“risk sharing”).
- This would incentivize schools to offer more practical degrees and better support.
While this idea gained attention, it didn’t become law. However, it sparked debates still active today.
5. Pandemic Relief and Student Loans
Surprisingly, one of Trump’s most popular student loan actions came during the COVID-19 pandemic:
- Suspension of federal student loan payments.
- 0% interest rates.
- Halted collections on defaulted loans.
Although initiated under Trump, these measures were extended by the Biden administration and provided critical relief to millions of borrowers.
Conclusion
Donald Trump’s impact on student loans was complex. While he supported efficiency and reduced government involvement, many of his policies made it harder for defrauded students to seek forgiveness. However, emergency relief efforts during the pandemic showed a willingness to protect borrowers in times of crisis. Whether you agree or disagree with his approach, Trump’s legacy continues to shape the student loan conversation in 2025 and beyond.
