A second Trump term would be 'chaos' for student loan borrowers

Trump has intensified his verbal attacks on student loan forgiveness and a recent Supreme Court ruling has weakened the Department of Education.

• Trump has intensified his verbal attacks on Biden's "vile" student loan forgiveness policies.
• The Supreme Court ruling striking down the Chevron doctrine weakened the Department of Education.
• If re-elected, Trump could slash forgiveness, close the Ed Dept, and send student loans to the private sector.

Donald Trump has long regarded the student loan forgiveness measures rolled out under the Biden administration as a stunt to garner "publicity for the election." Still, if he's elected again, Trump is poised to do more than just roll the measures back.

At a campaign event in late June, Trump called Biden-era student debt relief measures "vile," suggesting that student loan borrowers shouldn't count on forgiveness under a second Trump administration. He has also repeatedly praised the Supreme Court's June 2023 decision to strike down Biden's "unfair" effort to cancel up to $400 billion in student loans — which would have forgiven up to $20,000 for Pell Grant recipients and as much as $10,000 for borrowers who make under $125,000 a year.

Though he doesn't have much in the way of an official policy plan for a second term, one specific pledge Trump makes on his campaign website is to "close the Department of Education in Washington, DC and to send all education work and needs back to the States."

The move is straight out of the Project 2025 playbook, a road map for the next presidency created by conservative activists to "bring quick relief to Americans suffering from the Left's devastating policies."

In particular, Project 2025 — which Trump has publicly distanced himself from in recent remarks, indicating "some of the things they're saying are absolutely ridiculous and abysmal," though he continues to echo their policy suggestions — takes aim at some Title IX protections and seeks to roll back some equity-focused policies based on preventing discrimination based on race and gender identity.

Eliminating the Department of Education and its "woke-dominated system of public schools" is high on the list of Project 2025's priorities for the first 180 days of the next conservative administration — meaning Trump, if he's elected.

"That type of deconstruction of the US Department of Education entirely would create quite a bit of chaos," Jan Miller, a student loan consultant with more than 25 years of experience in the financial industry, told Business Insider.

Defunding the Education Department

The Department of Education runs the federal Pell Grant system for low-income students and the federal work-study program. It also facilitates the service of federal education grants and loans and their repayment and forgiveness programs.

While it would require Republican control of both the House and Senate for Trump to close the Education Department completely, doing so would mean access to educational funding and resources would be limited depending on what state a student resides in, student financial aid expert Mark Kantrowitz told BI.

Even if Trump doesn't manage to close the Education Department, he could still restrict its resources and slow hiring, causing delays in processing loans and grant applications. He could also cut back programs like federal work study, which provides part-time jobs for students who demonstrate financial need to help them pay for school.

"It would clearly be chaos if they actually succeed in doing it, and it wouldn't necessarily save the government money unless they cut out things wholesale," Kantrowitz said.

A recent Supreme Court ruling striking down the Chevron doctrine has already weakened the Education Department. The ruling struck down 40 years of precedent that required courts to defer to agencies' interpretations of ambiguous statutes.

Betsy Mayotte, the president and founder of The Institute of Student Loan Advisors, told BI that the ruling could mean the Education Department becomes involved in legal challenges to its regulatory language, forcing it to devote more resources to those battles.

"Depending on who is elected or reelected in this upcoming election, the whole Chevron case could add more complexity to the outcomes we see for both people attending school now, people that are about to attend school, and people that already have student loans," Mayotte said.

What a second Trump term could mean for students

In Trump's previous administration, a backlog of applications to the Education Department's Public Service Loan Forgiveness program piled up, and he worked to weaken forgiveness protections for students who'd been defrauded by higher education institutions, BI previously reported. The former president also proposed massive cuts to the Education Department's budget and supported plans to cap the amount of loans parents can take out to fund their child's education.

Biden-era student loan forgiveness measures, as well as his new income-driven SAVE repayment plan, are making their way through court challenges led by conservative groups, which are not likely to be resolved before 2025. If Trump wins in November, he could end the legal battles — thereby ending students' chances at forgiveness and reduced payment amounts — by casting Biden's efforts aside, BI previously reported.

"Overall, I think a Biden administration is going to be more favorable for college affordability than a Trump administration," Kantrowitz said. "You just look at what happened during the Trump's presidency, and you can expect a lot of that to occur again — and then maybe some new things."

Representatives for the Trump campaign did not respond to a request for comment from Business Insider.