Can Trump Rescind Student Loan Forgiveness From Student Loan Borrowers

Could Trump Rescind Student Loan Forgiveness? Here’s What Borrowers Need to Know

The return of Donald Trump to the White House has sparked significant concern among student loan borrowers about the future of student loan forgiveness programs. Over the past four years, the Biden administration has forgiven over $180 billion in student loan debt through initiatives such as Public Service Loan Forgiveness (PSLF), borrower defense claims, and a broad-based relief plan that is now defunct. However, Trump has been vocal about his opposition to student debt cancellation, referring to it as a "total catastrophe," and has expressed a desire to dismantle the Department of Education. This has left many borrowers wondering whether Trump could rescind student loan forgiveness and whether those who have already received forgiveness could be required to repay their loans.

Can the Government Take Back Forgiven Student Loans?

For borrowers who have already received student loan forgiveness, the good news is that the likelihood of the government clawing back forgiven loans is extremely low to nonexistent. Once the Department of Education officially discharges a borrower’s loan, the debt is considered gone. Experts agree that reversing legally granted forgiveness would be both challenging and unprecedented. For instance, Mark Kantrowitz, a financial aid and student loan expert, has stated that borrowers who have a letter from the Department of Education confirming their loan balance is zero have legal protections in place. The promissory note borrowers sign outlines their eligibility for certain types of forgiveness, which they could enforce in court if necessary. Elaine Rubin, a student loan policy expert, has echoed this sentiment, noting that the risk of rescinding forgiveness is "extremely low to nonexistent." The only known instances of revoked forgiveness have involved errors or fraud, not policy reversals. Andrew Gillen, a research fellow at the Cato Institute’s Center for Educational Freedom, has also concurred, stating that there is virtually no chance of forgiven debt being reversed. Kantrowitz has further emphasized that courts have historically treated student loan forgiveness as sacrosanct and protected from retroactive reversal, citing legal precedents and contractual rulings that make clawing back forgiven debt difficult.

What Could Change for Borrowers Still Seeking Student Loan Forgiveness?

While existing forgiveness is likely safe, the Trump administration could take steps to limit future relief for borrowers still seeking forgiveness. One potential target is the SAVE Plan, introduced by the Biden administration in 2023. This plan lowers payments for most borrowers and provides earlier loan cancellation. However, the program is already in limbo due to lawsuits, and a Trump administration could refuse to defend it in court or eliminate it through budget reconciliation. Another area of concern is Public Service Loan Forgiveness (PSLF). Trump has previously proposed eliminating PSLF, which allows borrowers working in government and nonprofits to receive forgiveness after 120 qualifying payments. While scrapping the entire program would require an act of Congress, the administration could dismantle administrative expansions such as the PSLF Buy Back program. Additionally, Trump could reinstate stricter borrower defense rules, making it harder for students defrauded by predatory schools to get relief, and reverse bankruptcy discharge rules that make it easier to discharge student loans in bankruptcy.

What Should Borrowers Seeking Student Loan Forgiveness Do?

For borrowers who have already received forgiveness, the advice is clear: rest assured that your loans won’t suddenly reappear. However, for those currently in repayment or pursuing forgiveness, now is the time to take proactive steps. Borrowers enrolled in the SAVE Plan should consider switching to another income-driven repayment (IDR) plan that offers forgiveness after a set period, as the SAVE Plan is likely to be dismantled. Those eligible for PSLF should act quickly to utilize the Buyback program before potential changes. Additionally, borrowers should monitor communications from loan servicers, keeping copies of servicer correspondence, payment records, and forgiveness approvals, as documentation will be key if future disputes arise.

The Bottom Line On Clawing Back Student Loan Forgiveness

The confirmation hearing for Linda McMahon, Trump’s nominee to lead the Department of Education, is scheduled for later this week, and it is likely that there will be a flurry of activity to reshape student loan policy. However, borrowers who have already had their loans forgiven should be able to breathe easy. The legal and contractual protections in place make it highly unlikely that the government could claw back forgiven loans. While the future of student loan forgiveness programs remains uncertain, borrowers who have already received forgiveness can rest assured that their debt is gone for good.

More Related Reading

For those interested in staying informed about the ongoing changes in student loan policy, additional reading materials are available. These include articles on the limbo status of student loan forgiveness, the potential disappearance of the interest deduction, and the new tax threats facing graduate students as GOP targets scholarships. Staying informed and proactive will be crucial for borrowers navigating the evolving landscape of student loan forgiveness.