Student Loans

What to know about student loan relief efforts as Trump returns to White House

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Millions of people have had their student loans canceled under President Joe Biden. But as the new administration of President-elect Donald Trump prepares to take office next week, student loan forgiveness and relief programs could be in jeopardy.

The plans have been a financial safety net for millions of Americans trying to make ends meet. But big changes could be on the way, depending on what happens in Washington.

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"Based on the Trump administration policy and statements, it's not likely that forgiveness is going to be an option for student loan borrowers heading into the end of the next four years," said Denny Ceizyk, a senior writer at Bankrate.

Biden's loan repayment program – known as "SAVE" – is being held up in court. Nearly 8 million people are waiting to find out if the program is legal or not.

"That includes some of the income-based repayment options that allowed for payments as low as $0, and the interest payment subsidy is likely to also go away," Ceizyk said. "So, for student borrowers that had a $0 payment, that interest was subsidized by the government. It's likely to go back to accruing."

Other programs like public service loan forgiveness – which cancels loans for people who work in public service after 10 years of payments – may also be at risk.

"Review the terms of the student loan notes that you signed when you first took them out to see what those repayment options were before, because it's possible that it will revert back to those," recommended Ceizyk.

Borrowers will be notified ahead of any potential that could impact monthly payments. But Ceizyk said now is the time to budget to avoid any surprises down the road.

"How much free cash do you have in your budget every month and how much would you allocate to that student loan payment?" asked Ceizyk. "If there's not a lot, the earlier that you start having conversations with your servicer and knowing what your repayment options were on the original terms of your student loan, the better."

For private student loans, this could be a good time to explore refinancing options.

"With the federal reserve focused on lowering rates and having lowered rates three times in 2024, it certainly creates the possibility for that opportunity," said Ceizyk. "Keeping in mind that if you refinance to a private student loan, you'll lose some of the payment flexibility that you have with federal student aid."

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