Trump may roll back student loan forgiveness programs if elected to second term

At a June 18 campaign rally in Racine, Wisconsin, former President Donald Trump slammed the Biden administration's efforts to forgive student debt as "vile" and "not even legal."

"The students aren't buying it, by the way," Trump said to a crowd of a couple of thousand people near Lake Michigan.

Trump also brought up the Supreme Court's decision in 2023 to block President Joe Biden's first attempt at broad student loan cancellation: "He got rebuked, and then he did it again."

"It's going to get rebuked again even more," Trump said.

As president, Trump called for the elimination of the U.S. Department of Education's existing loan relief programs, including the popular Public Service Loan Forgiveness initiative, which benefits public employees such as members of the U.S. Armed Forces, first responders, public defenders, prosecutors and teachers. He also wanted to slash the department's budget, and his administration halted a regulation aimed at providing loan forgiveness to those defrauded by their schools.

Now, as he runs for president again, Trump seems poised to make even deeper cuts to financial aid programs for students. He has repeatedly attacked Biden's loan relief policies, and he said in a campaign video in late 2023 that he wants to close the Education Department altogether.

Outstanding education debt in the U.S. exceeds $1.6 trillion, according to a 2022 report by the nonpartisan Congressional Research Service. Nearly 43 million people — or 1 in 6 adult Americans — carry student loans, the report said.

Project 2025, a set of proposals developed by The Heritage Foundation from more than 100 conservative organizations, says that "student loans and grants should ultimately be restored to the private sector." (Some conservatives argue that private companies would do a better job lending to students than the federal government.) The proposal also calls for reducing affordable repayment options for borrowers and ending the loan forgiveness offered under these plans after a certain period.

"Trump will undo President Biden's student loan forgiveness proposals," said higher education expert Mark Kantrowitz. "He will relax rules on for-profit colleges, as part of deregulation efforts, and propose cuts, including possibly defunding the U.S. Department of Education."

In an email response to CNBC, Steven Cheung, a spokesman for the Trump campaign, referred CNBC to resources including Trump's campaign website and a range of media articles in which sources frame student loan forgiveness as a boon to high earners and those who attended elite colleges. Less than 1% of federal student borrowers attended Ivy League colleges, according to an estimate provided to CNBC by Kantrowitz.

Cheung did not answer specific questions from CNBC about what Trump plans to do regarding student debt and education if he is elected president.

Efforts against student loan relief already in play

Members of Trump's party, meanwhile, have already stymied many of Biden's efforts to deliver student loan relief. Most recently, lawsuits by Republican-led states, including Florida, Arkansas and Missouri, resulted in two federal judges halting implementation of key parts of the president's new repayment plan, which dramatically reduced many borrowers' monthly payments.

The preliminary injunctions prevented the Biden administration from forgiving any more debt under the Saving on a Valuable Education, or SAVE, plan, and from further reducing enrolled borrowers' payments in July, as it planned. On Sunday, however, a federal appeals court granted the Education Department's request to stay one of those injunctions, allowing the department to move ahead with lowering loan bills for SAVE enrollees.

Cody Gude, a social media consultant in Tampa, Florida, said he expects if Trump wins it will become more difficult and expensive for him to pay back his student loan debt of about $34,000.

"With inflation and student loans restarting, it's become a lot," said Gude, 35.

Gude said he was upset that Florida joined the lawsuit against the SAVE plan. He said he was looking forward to his student loan bill decreasing in July so he wouldn't have to deliver groceries through Instacart anymore in addition to his regular job.

"It hurts that my home state doesn't want to help its own citizens," Gude said.

He said he worries that if elected Trump would roll back financial relief options for young people, and that he plans to vote for Biden.

Bringing 'free market forces' to student lending

Many voters welcome Trump's stance on student loan relief and question the fairness of forgiving the loans of those who have benefited from a higher education.

Just 15% of Republicans find student loan forgiveness important, compared with 58% of Democrats, according to a national poll from mid-May by the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research.

The Biden administration's most recent student loan forgiveness proposal garnered a record number of public comments, with more than 148,000 people sharing their opinion.

"I call on the Biden administration to stop imposing an unjust burden on Americans who did not go to college or have paid off their student loan debt," one person wrote.

Another commented: "I paid for my undergraduate degree by working throughout my high school and college career. I worked overtime and three part-time jobs when I pursued a graduate degree."

"College is a personal choice that comes with many adult decisions," the second person said. "It is not the federal government's responsibility to pass those personal decisions off onto our country's taxpayers."

Elaine Parker, president of the Job Creators Network Foundation, a conservative advocacy group, said Biden was only forgiving student debt in an effort to buy votes.

"They don't want to solve the problem," Parker said. She said the root cause of the student loan crisis was skyrocketing college tuition.

Parker said Congress needs to hold legislative hearings and bring in campus leaders to justify their tuition hikes, excessive administrative costs and degree programs that lack transparency on career outcomes.

She also said the private sector should play a bigger role in financing higher education.

"Why are the banks taken out of this?" Parker asked. "We've lost the free market forces in the college lending system."

Concerns about Trump's proposals

Higher education experts and consumer advocates expressed concern about the reforms floated by conservatives and Trump.

If the U.S. Department of Education were shut down, "there would be complete chaos," Kantrowitz said.

Such a move would mean an end to Pell Grants, one of the biggest sources of financial aid available to college students, as well as federal student loans and work study opportunities, he said.

"K-12 education would be in disarray, too," Kantrowitz added.

Meanwhile, transferring student lending from the government to private companies would only hurt consumers and worsen the crisis, said Aissa Canchola-Banez, political director at Protect Borrowers Action.

"Private lenders put their bottom line ahead of the needs of borrowers and that is a recipe for disaster," Canchola-Banez said.

Kelly Lambers, of Cincinnati, said the issue of student loan debt will be top of mind for her in the November election. The social media strategist said her debt of around $97,000 makes it hard for her to cover her basic expenses.

She said the Biden administration's SAVE plan brought her monthly bill on her federal student loans down to $31 from $100. She also pays $650 a month for her private student loans.

She said she plans to vote for Biden, in part because she believes she could lose that relief under Trump.