Trump Won: How Does This Affect Your Student Loans?

Now that the election is over, you may start wondering what will happen with your student loans now that Trump has been elected.

How does this affect double consolidation? What about the SAVE Plan?

First and foremost, keep in mind that Public Service Loan Forgiveness (PSLF) and standard forgiveness through the Income-Based Repayment (IBR) plan are here to stay. There remain many planning strategies that can be utilized to reach loan forgiveness and I don’t expect this to go away any time soon.

While it’s too early to say with certainty what will happen with the student loan environment going forward, here are some items that I’m watching for:

Double Consolidation: 

Interestingly, the rule that put the SAVE plan into effect also contained language closing this loophole on July 1, 2025. If this rule gets shot down (see below), this loophole could conceivably stay in place for longer.

The SAVE Plan: 

Currently held up in a legal battle, this could get shot down by the Federal Appeals Court. If so, the Biden administration would almost certainly appeal this to the Supreme Court. But the Supreme Court won’t hear this case until early 2025. What isn’t clear is what happens when a new Dept of Education appointee takes charge. Does this person decide to just drop the case? It seems that if the case gets shot down at the Appeals Court level, it will likely stay that way going forward. 

Currently, I’m using the Income-Based Repayment (IBR) plan in my planning projections, which would remain in place regardless of this case.

The One-Time Payment Count Adjustment:

Previously, this was slated to be completed by September 1 of this year. However, this has not been fully implemented (I imagine part of this has to do with the legal hurdles that the Dept of Education has had to repeatedly deal with). It seemed to me that the Biden administration may have been stalling while the legal battle was underway to give borrowers the most benefit. 

Now that Trump will be taking over in January, does the Biden administration try to expedite implementing this before the end of the year? If so, consolidations could have tricky consequences for payment counts if done after the adjustment is fully implemented. Due to the nuances of the legal battle around the SAVE Plan, it could be that consolidations reset the payment clock to zero once the payment count adjustment is finished.

If you need to do a double consolidation, you’ll still want to move forward with this anyway, and preferably before the end of 2024. But paying attention to payment counts and how they might be affected by consolidation will be very important.

Final thoughts

While the main planning strategies remain intact (double consolidation, using an income-driven repayment plan, and utilizing forgiveness), there are some ways they could be affected by the new administration.

I will be carefully watching how this unfolds so I can provide you with the best planning tips and strategies.

If you have any questions about this, feel free to email me. You can also book a Q&A call with me to get your questions answered. I’m here to help.