{"id":7387,"date":"2025-11-12T22:15:09","date_gmt":"2025-11-12T22:15:09","guid":{"rendered":"https:\/\/wpinitiate.com\/echo-test\/demo973e36f5\/2025\/11\/12\/the-winners-and-losers-in-trumps-new-student-loan-plans-usa-today\/"},"modified":"2025-11-12T22:15:09","modified_gmt":"2025-11-12T22:15:09","slug":"the-winners-and-losers-in-trumps-new-student-loan-plans-usa-today","status":"publish","type":"post","link":"https:\/\/wpinitiate.com\/echo-test\/demo973e36f5\/2025\/11\/12\/the-winners-and-losers-in-trumps-new-student-loan-plans-usa-today\/","title":{"rendered":"The winners (and losers) in Trump’s new student loan plans – USA Today"},"content":{"rendered":"
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Forgiveness for some<\/a> but maybe not for others is what President Donald Trump<\/a>\u2019s student loan forgiveness plan is amounting to, which is sowing uncertainty for borrowers, experts said.<\/p>\n

In a big win<\/a> for borrowers last month, the Department of Education agreed with the American Federation of Teachers to process student-loan forgiveness\u00a0applications<\/a> for borrowers who reached payment thresholds on an income-contingent repayment plan or the Pay As You Earn plan as long as the plans remain in effect. Trump plans to phase out the plans by\u00a0July 1, 2028. Income-based repayment plans also are eligible for forgiveness.<\/p>\n

Celebrations quickly faded when less than two weeks later the Education Department issued a rule<\/a> critics say would curb Public Service Loan Forgiveness. The rule, effective July 1, allows the department to exclude forgiveness for those who work at organizations it believes engage in \u201ccriminal activity.\u201d<\/p>\n

The rule would allow the department to \u201ctarget sanctuary jurisdictions, as well as nonprofit organizations providing support to immigrant families, gender-affirming care, diversity and equity in the workplace, and protecting the first amendment rights of protesters,\u201d nonprofit consumer advocacy group Protect Borrowers said in a statement.<\/p>\n

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What is PSLF?<\/h2>\n

PSLF<\/a>, or Public Service Loan Forgiveness, created in 2007, cancels a borrower\u2019s remaining federal student debt after 10 years of repayment for those who work for a \u201cpublic service\u201d employer, generally defined as government or a nonprofit entity. It\u2019s meant to reward people who work for the \u201cpublic good,\u201d like firefighters, police, public educators, military and public health workers.<\/p>\n

Why is the Education Department redefining who\u2019s eligible for PSLF?<\/h2>\n

The Education Department said<\/a> eligibility standards for what constitutes a qualifying public service employer haven\u2019t been adequately monitored. As a result, certain organizations \u201cengaging in illegal activities that harm their communities and the public good\u201d have qualified, it said in a statement.<\/p>\n

\u201cTaxpayer funds should never directly or indirectly subsidize illegal activity,\u201d said Under Secretary of Education Nicholas Kent. PSLF \u201cwas meant to support Americans who dedicate their careers to public service \u2013 not to subsidize organizations that violate the law, whether by harboring illegal immigrants or performing prohibited medical procedures that attempt to transition children away from their biological sex.\u201d<\/p>\n

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What will happen to PSLF?<\/h2>\n

PSLF won\u2019t end, but its rules will likely be settled by the courts after a flurry of lawsuits were filed shortly after the Education Department announcement.<\/p>\n

Twenty-one states and the District of Columbia sued the department over the new rule restricting eligibility for PSLF.<\/p>\n

\u201cPublic Service Loan Forgiveness was created as a promise to teachers, nurses, firefighters, and social workers that their service to our communities would be honored,\u201d said New York Attorney General Letitia James in a statement<\/a>. \u201cInstead, this administration has created a political loyalty test disguised as a regulation.\u201d<\/p>\n

A coalition of cities across the United States, labor unions and nonprofit organizations also\u00a0filed a lawsuit<\/a>\u00a0claiming the same.<\/p>\n

How does this affect borrowers?<\/h2>\n

Stay on course but be flexible, experts said.<\/p>\n

Borrowers should focus on keeping their loans in good standing with consistent payments and maintaining documentation and payment history, said Ken Ruggiero, chief executive of lender Ascent.<\/p>\n

\u201cAt the same time, it\u2019s smart to build flexibility into your long-term plan,\u201d he said. \u201cFederal forgiveness programs can be valuable, but they\u2019re also subject to political and legal changes. Look at PSLF as one possible path, not the only one. If forgiveness comes through, that\u2019s a huge win. But if not, you need to make sure that you\u2019re still on track toward financial independence and not relying solely on government discretion for relief.\u201d<\/p>\n

Borrowers should also be prepared to repay more of their loans because of the department\u2019s other changes to student loans<\/a> next year, said Kent Smetters, director of The Penn Wharton Budget Model.<\/p>\n

Only two repayment plans<\/a> will be available for loans taken out from July 1: a standard repayment plan that allows borrowers to repay over 10 to 25 years based on their loan amounts regardless of income and a Repayment Assistance Plan, or RAP,<\/a> with monthly payments between 1% and 10% of borrowers\u2019 discretionary income.<\/p>\n

As an example of how much more a borrower may end up paying, Smetters said consider an undergraduate borrower with $30,000 in debt with a 6.4% annual interest rate, along with a starting salary of $45,000 salary with a 3% annual wage growth. \u00a0<\/p>\n