5
#000000
#FFFFFF
student debt
Trump's Billionaire Education Secretary Makes 'Backroom Deal' to Shaft Low-Income Borrowers
Amid a cost-of-living crisis, millions of low-income borrowers may now be forced to spend several hundred more dollars a month paying for student loans.
Dec 09, 2025
As student debt exacerbates the financial struggles of millions of Americans, the Trump administration has taken a major step toward killing the Biden administration's student loan forgiveness program.
On Tuesday, the Department of Education announced that it had reached a settlement with the state of Missouri to end the Saving on a Valuable Education (SAVE) program, which allowed more than 7 million mostly low-income Americans to reduce their federal student loan payments.
Rather than setting monthly payments based on income, the SAVE program bases them on how much borrowers earn and the size of their families, which is referred to as an income-driven repayment option, or IDR. SAVE cut most enrollees' monthly loan payments in half and left 4.5 million of them, mostly those earning between 150–225% of the federal poverty level, paying $0 per month.
In March 2024, a coalition of 11 states led by Kansas Attorney General Kris Kobach sued in federal court to stop the SAVE plan. The next month a similar lawsuit was filed by another coalition of seven states led by Missouri's former attorney general, Andrew Bailey.
In February, the 8th Circuit Court of Appeals ruled in favor of the states, blocking 8 million borrowers from accessing lower payments under the program. Now President Donald Trump's administration which aggressively opposes student loan forgiveness, has agreed to settle the lawsuit, effectively killing SAVE.
“For four years, the Biden administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing administration,” said Undersecretary of Education Nicholas Kent. "The Trump administration is righting this wrong and bringing an end to this deceptive scheme. The law is clear: if you take out a loan, you must pay it back."
The settlement also includes a provision requiring that, for the next 10 years, the Department of Education notify the state of Missouri at least 30 days in advance before instituting broad-based student debt relief.
As the Debt Collective, a membership-based debtors' union, explained in a post on social media: "30 days is enough notice that Missouri will find standing to sue for relief before it even happens. So not only is Trump gutting the SAVE plan, they're essentially putting a moratorium on cancellation for the next 10 years with this agreement."
"What Republicans admit is that the executive administration does have authority to cancel federally held student debt," the group added. "They just want to make it so that it will be administratively and practically impossible to deliver it because of this technicality. It's stealing in advance."
SAVE was already slated to end in 2028 following July's passage of Republicans' One Big Beautiful Bill Act, which replaced it with a pair of less generous income-based repayment plans that require many debtors to pay hundreds more per month. The deadline to switch to one of the new plans will now move up, though the administration has not yet clarified when borrowers will have to switch.
The Debt Collective predicted that the end of SAVE "means many more debtors will likely be forced to default on their loans," which the group added "is bad for millions of families and our economy."
According to an analysis of federal student loan data from the American Enterprise Institute, a libertarian think tank, more than 12 million borrowers in the US are already in default or otherwise behind on their student loan payments.
Since their introduction, former President Joe Biden's student loan forgiveness policies have been chipped away at bit by bit through litigation. In 2023, the conservative US Supreme Court struck down the administration's plans to forgive up to $20,000 in student loan debt for millions of Americans, ruling that the plan exceeded the administration's executive authority. A year later, it halted SAVE as well while it considered the merits of the Missouri lawsuit.
The group Protect Borrowers, which supports student loan forgiveness, argues that SAVE is "not a novel use of executive power," noting that Congress gave the Education Department the authority to create IDRs in 1993 and that several other programs have been created since.
"This settlement is pure capitulation—it goes much further than the suit or the 8th Circuit order requires," said Persis Yu, the group's deputy executive director and managing counsel. "The real story here is the unrelenting, right-wing push to jack up costs on working people with student debt.”
A September survey by Data For Progress found that student loans make it more difficult for many borrowers to keep up with other bills amid a growing cost-of-living crisis: 42% of respondents said their debt payments had a negative impact on their ability to pay for food or housing. More than a third, 37%, said it had a negative impact on their ability to cover healthcare costs for themselves or their dependents, while the majority, 52%, said it had a negative impact on their ability to save for retirement.
“While millions of student loan borrowers struggle amidst the worsening affordability crisis as the rising costs of groceries, utilities, and healthcare continue to bury families in debt," Yu said, "billionaire Education Secretary Linda McMahon chose to strike a backroom deal with a right-wing state attorney general and strip borrowers of the most affordable repayment plan that would help millions to stay on track with their loans while keeping a roof over their head."
Keep Reading
Show Less
Trump Admin Weighs Privatizing Student Loans, Fulfilling Another Project 2025 Objective
One advocate said privatization "will limit access for students from the most underrepresented communities, raise borrowing costs, and eliminate vital protections that current federal borrowers rely on."
Oct 07, 2025
The Trump administration is reportedly weighing the privatization of federal student loans, fulfilling yet another Project 2025 agenda item.
Politico reported on Tuesday:
Trump administration officials are exploring options to sell off parts of the federal government's $1.6 trillion student loan portfolio to the private market, according to three people familiar with the matter.
The discussions have taken place among senior Education Department and Treasury Department officials and have focused on selling high-performing portions of the government's massive portfolio of student debt, which is owed by about 45 million Americans.
Since retaking office, Trump has already enacted numerous changes to student loan policy that have squeezed borrowers, including resuming wage garnishments for millions of borrowers with overdue debt payments after a five-year reprieve.
Meanwhile, he has slashed programs that helped those in debt pay their loans. These include the Biden-era Saving on a Valuable Education (SAVE) Plan, which provided payment assistance to over 8 million student debtors based on income level. The One Big Beautiful Bill Act (OBBBA) set the SAVE program to formally shut down in July 2028, giving borrowers until then to find a new payment plan.
With little notice, the administration also paused forgiveness from the Income-Based Repayment (IBR) system, which was established in 2007 and enabled 2 million more borrowers to pay rates pegged to their income, with the promise of forgiveness after 20 to 25 years.
The OBBBA included a total $300 billion worth of cuts to higher education programs, primarily through federal student loans.
As Persis Yu, the deputy executive director and managing counsel at the advocacy group Protect Borrowers, explained, this included "the elimination of certain loans for graduate students, new annual and lifetime limits on federal loans for parents, cuts to Pell Grant eligibility, and new, stingier repayment options that will spike monthly costs and push borrowers further into debt."
The idea of bringing in private consultants to determine the value of the government's debt holdings and selling some student loan debt to private investors was floated during the first Trump term, but never came to fruition. However, this idea was fleshed out more thoroughly in the Heritage Foundation's Project 2025 playbook, which states that "student loans and grants should ultimately be restored to the private sector."
While details of how exactly the administration may plan to sell off this debt are scarce, critics have warned that privatization will put even more borrowers in precarious situations.
"Private student loans generally have more onerous repayment terms than federal loans, lacking options such as Income-Driven Repayment and often limiting and imposing fees for the use of forbearances," Yu said. "Private loans also lack vital cancellation protections found in federal student loans, such as disability and death discharges, or Public Service Loan Forgiveness."
"Private loans will not merely replace federal student loans," she continued. "Instead, they will limit access for students from the most underrepresented communities, raise borrowing costs, and eliminate vital protections that current federal borrowers rely on."
Private loans are also more rife with abuse. According to the Century Foundation, while private loans account for just 8% of all student loan debt, they have accounted for more than 40% of student loan-related complaints to the Consumer Financial Protection Bureau. One third of those complaints come from borrowers who say they are unable to afford their monthly loan payments.
At the same time, even while the Trump administration claims privatizing debt would save money for taxpayers, Preston Cooper, a senior fellow at the conservative American Enterprise Institute, told Politico that savings would likely be minimal because investors would be unlikely to pay more for the loans than they are worth.
"The only way for [Trump's plan] to make economic sense is to structure the deal in a way that really short-changes borrowers," said Eileen Connor, executive director of the Project on Predatory Student Lending.
Yu says that the goal of privatization rests on a faulty premise: "The argument that free markets will control the cost and improve the quality of higher education underestimates the harm that can be caused by setting private lenders loose on students and fundamentally misunderstands the relationship between these market participants. In a debt-financed higher education system, students are not the consumer; they are the commodity."
Sara Partridge, associate director for Higher Education Policy for the Center for American Progress, said, "Once again, this Administration seeks to line the pockets of private companies at student borrowers’ expense while moving away from a system that provides consumer protections under the law."
Keep Reading
Show Less
Our Universities Must Not Fold to Trump's Authoritarian Compact
This compact goes against every democratic principle our country and our schools should uphold, and we reject the Trump administration’s attempt to cajole universities into compliance through explicit bribery.
Oct 06, 2025
We are students at the nine universities most recently targeted by President Donald Trump. We've spent years demanding that our universities improve conditions for students, lower tuition, and create spaces for the free exchange of ideas. No one told us the way to influence our universities was simply to bribe them with millions of dollars of federal funding.
On October 1, the Trump administration sent our schools a 10-point memo titled "Compact for excellence in higher education." If adopted, the compact would limit international student enrollment, force universities to share student information with the federal government, enforce the adoption of a specific definition of gender and threaten affinity spaces, and take action against actors that “punish, belittle, and even spark violence against conservative ideas.” In return, our universities are promised increased access to federal funding opportunities. If they don't comply? Well, any school can “elect to forgo federal benefits.”
This compact goes against every democratic principle our country and our schools should uphold, and we reject the Trump administration’s attempt to cajole universities into compliance through explicit bribery. It should go without saying that extorting universities to comply with ideological demands and quell freedom of speech is antidemocratic, but here we are.
In a public statement, White House Official May Mailman claimed that our nine universities—Brown, the University of Texas at Austin, the University of Arizona, Dartmouth, MIT, the University of Pennsylvania, Vanderbilt, the University of Virginia, and the University of Southern California—were chosen because they are "good actors." In other words, the Trump administration expects our universities to fold. And they expect to use our compliance as a green light to force universities across the country into similar agreements.
If any one of our universities agrees to this compact, it risks creating a chain reaction for the higher education system at-large to side with tyrants over students.
Here's the thing—we cannot deny that Trump's compact pointed out some very real issues in our higher education system. It is true that "too many young adults have become saddled with life-altering debt." It is true that "truth-seeking is a core function of institutions of higher education." For decades, young people have borne the brunt of our country's refusal to invest in education. As federal funding has fallen, administrator salaries have ballooned while faculty, staff, and graduate worker wages have stagnated and tuition prices have skyrocketed. Today, many of our schools are run more like hedge funds than like centers of learning. That's why we have continuously demanded that our government and our universities make higher education more accessible, and allow us to freely share our viewpoints on campus.
Trump's memo, however, does not actually sincerely seek to confront these issues. It is a thinly-veiled attempt to undermine fundamental principles of university independence and attack vulnerable students, and it is a clear instance of authoritarian overreach. Trump claims to value "truth-seeking," yet limits what "truth" can be sought. The compact places surveillance on what ideas can and cannot be present in the campus setting, requiring screening of international students for "anti-American" values. Under the guise of promoting campus discourse, it gives institutions the tools to gut departments that the Trump administration could frame as "belittling" conservative ideas. What counts as an "anti-American" value or "belittling" conservative ideas is malleable to the Trump administration's vantage point. The compact also effectively bans peaceful campus protest, a crucial part of civil discourse on our campuses.
To define a "free marketplace of ideas" by its adherence to a specific set of ideas and exclusion of a specific set of individuals is not creating a free marketplace at all: It's breeding authoritarianism.
This compact also asks our universities to commit to repression of LGBTQ+ students, including "biological" definitions of sex and gender, that would strip our queer students of protections and resources crucial to their right to a free and safe education. For LGBTQ+ students, this compact is not just a "political" attack; it is an immediate threat to our education and survival.
And this comes after a speech-chilling effect has already taken over our campuses. Students who dared to speak out in support of Palestine, especially, have faced extreme repression on campus, including police sweeps, expulsions, and attempted deportations. Over the summer, we watched as Brown University and the University of Pennsylvania signed agreements that sold students' personal information to the Department of Justice, excluded trans students from university life, and stripped them of their healthcare. We watched as the University of Virginia acquiesced to the Department of Justice's demands to dissolve diversity, equity, and inclusion offices against the wishes of the university community and forced President Jim Ryan to step down. We've watched our peers, Mahmoud Khalil and Rumeysa Öztürk, taken for daring to speak against Israel's genocide, and we continue to watch as Immigraton and Customs Enforcement takes our community members on and near our campuses.
The founding principles of our universities—quality education free from censorship, workforce development, and shared governance of university structures—have been under attack for decades. The solution is not to take a bribe from a wannabe-dictator who wants to trojan-horse exclusionary policies under the guise of protecting American students. The solution is to listen to the students, faculty, and staff who actually make our schools run.
This memo was sent out during a government shutdown. While key government programs are stopped and unknown numbers of federal employees are furloughed, the Trump administration is seeking ways to expand its power. If any one of our universities agrees to this compact, it risks creating a chain reaction for the higher education system at-large to side with tyrants over students. We demand that our universities do not fold, and do not sign.
Keep Reading
Show Less
Most Popular