As student debt continues to weigh heavily on millions of Americans, President Donald Trump has proposed a new approach to student loans. His plan, if enacted through legislation, would represent a major shift from the current system. Here are three key ways his bill would change student loans in the U.S.:
1. Simplified Income-Based Repayment Plan
Trump’s plan proposes consolidating the existing multiple repayment programs into a single income-based repayment plan. Borrowers would pay a fixed percentage of their income (likely around 12.5%) for a set period—15 years for undergraduates and 30 years for graduate students—after which the remaining balance would be forgiven. This would simplify the repayment process and provide a clear path to loan forgiveness.
2. Elimination of Public Service Loan Forgiveness (PSLF)
Under Trump’s proposal, the Public Service Loan Forgiveness program would be eliminated for new borrowers. The current PSLF allows government and nonprofit employees to have their loans forgiven after 10 years of service and qualifying payments. The bill aims to treat all borrowers equally regardless of their job sector, removing what the Trump administration views as a “privileged loophole.”
3. Capping Federal Student Lending and Encouraging Private Alternatives
Another significant change would involve limiting federal student loan amounts, especially for graduate students and parents. The goal is to reduce reliance on government-backed loans and encourage colleges to rein in tuition costs. It would also promote greater use of private lending options, signaling a shift away from federal dominance in the student loan market.
Final Thought
Trump’s proposed student loan reform is centered on simplifying repayment, reducing government intervention, and limiting forgiveness programs tied to employment type. While some applaud the streamlined approach, critics argue it could make college less accessible for low-income and public sector students. If passed, this bill would represent one of the most substantial changes to student loans in recent U.S. history.
