At Least 10 Student Loan And Federal Aid Programs Run By The Department Of Education May Be Cut

Impact on Millions: Proposed Cuts to Student Loan and Federal Aid Programs

The Trump administration and Republican lawmakers in Congress are considering significant cuts to nearly a dozen federal student loan and aid programs, which could affect millions of Americans. These programs, administered by the U.S. Department of Education, provide critical support to students, families, and borrowers. The proposed cuts could have far-reaching consequences, impacting everything from college affordability to career advancement and loan repayment.

Targeting Federal Student Loan Programs

The Trump administration and Republican lawmakers are targeting several federal student loan programs for reduction or elimination. These include the Federal Direct Graduate PLUS Loans and Federal Parent PLUS Loans, which are set to be phased out by 2028. The Graduate PLUS program allows borrowers pursuing advanced degrees to cover the full cost of graduate school, while the Parent PLUS program helps families pay for their children’s undergraduate education. Eliminating these programs would force borrowers to rely on private loans, which often have higher interest rates and fewer consumer protections. Additionally, Republicans are considering capping or reducing new disbursements of federal Direct student loans starting in July 2025, which could limit access to affordable credit for future students.

Modifications to Federal Aid and Forgiveness Programs

The proposed cuts extend beyond loans to include other forms of federal aid. Republican lawmakers are eyeing modifications to Pell Grants, a cornerstone of financial aid for low-income students. While the Pell program would not be eliminated, it could be reformed by capping grants at the median cost of attendance or expanding eligibility to short-term credential programs. Additionally, the federal Work Study program may face unspecified reforms. These changes could reduce the overall support available to students who rely on these programs to cover college costs.

Attacks on Student Loan Forgiveness and Repayment Options

Republican leaders are also targeting student loan forgiveness and repayment programs. The SAVE Plan, an income-driven repayment program introduced by the Biden administration, could be repealed. Other income-driven repayment plans, such as Income-Based Repayment (IBR) and Pay As You Earn (PAYE), may also be eliminated. These programs are critical for borrowers who cannot afford standard repayment plans, as they tie monthly payments to income and offer forgiveness after 20 or 25 years. The proposed changes would replace these plans with a single income-driven option that eliminates time-based forgiveness. Public Service Loan Forgiveness (PSLF), which rewards borrowers working in the public or nonprofit sectors, may also face unspecified reforms. These changes could leave millions of borrowers without access to affordable repayment options.

Curtailing Student Loan Interest Benefits

The Trump administration and Republican lawmakers are also looking to eliminate student loan interest benefits. This includes repealing the student loan interest deduction, which allows borrowers to deduct up to $2,500 in interest payments from their taxable income. Additionally, Republicans are considering eliminating interest subsidies on subsidized federal student loans, which currently prevent interest from accruing while borrowers are in school. These changes would increase the financial burden on borrowers, particularly low-income individuals who rely on these benefits to manage their debt.

A Broad Assault on the Department of Education

The Trump administration’s efforts to cut or eliminate student loan and aid programs are part of a broader push to diminish or dismantle the U.S. Department of Education. While legal experts question whether the department can be eliminated without congressional action, the administration is already taking steps to sideline staff and undermine its functions. These efforts, combined with the proposed cuts, signal a significant shift in federal priorities, with potentially devastating consequences for students, families, and borrowers. The changes could make higher education less affordable, increase debt burdens, and limit opportunities for career advancement and economic mobility.