Key Points
- Student loan repayment plans created by Congress are harder to change than those created by the Department of Education.
- Trump administration policies could easily target plans developed through administrative rulemaking.
- Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans vary by origin.
Student loan borrowers are wondering what the future of student loan repayment will look like under the Trump Administration. There have been several proposals to eliminate or change major programs, including repayment plans and loan forgiveness.
Understanding which plans were created by Congress and which were developed through Department of Education rulemaking is critical. This distinction determines how easily plans can be modified or eliminated—a pressing issue under administrations with differing views on higher education funding.
For plans created by Congress, only Congress can pass a new law to change it. However, for plans created through administrative rulemaking, the President could simply instruct a new rule to be created that voids the previous ones.
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Student Loan Plans Created By Congress
Several income-driven repayment (IDR) plans, including the Income-Based Repayment (IBR) plans established in 2007 and modified 2010, originated through Congressional action. These plans are enshrined in federal law, making them more resistant to policy changes.
Borrowers on these plans typically pay a percentage of their discretionary income, with loan forgiveness granted after 20 or 25 years of qualifying payments.
Public Service Loan Forgiveness (PSLF), another law Congress, offers forgiveness for borrowers employed in qualifying public service roles after 10 years of payments.
PSLF has faced scrutiny for its administrative challenges but remains a cornerstone of federal student loan forgiveness programs. Legislative action would be required to significantly alter or dismantle PSLF, offering a layer of protection for borrowers relying on this benefit.
@thecollegeinvestor What student loan repayment plans were created by Congress, and which were created by executive action or rulemaking? #studentloan #studentloandebt #studentloanforgiveness #trump ♬ original sound - The College Investor
Repayment Plans Created By Rulemaking
The Department of Education’s regulatory authority allowed for the creation of plans like Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and the Biden administration’s Saving on a Valuable Education (SAVE) Plan.
Unlike laws passed by Congress, these "rules" are more vulnerable to changes under different administrations. For example, the SAVE Plan, launched in 2023, offers generous terms for low-income borrowers, including zero interest accrual under certain conditions. However, it could be revised or repealed through administrative action. It's also currently paused pending the outcome of current litigation.
Another significant plan born from rulemaking is Income-Contingent Repayment (ICR), the earliest IDR option. While it remains available, its terms are less favorable compared to newer plans, reflecting how administrative changes can evolve repayment options over time. However, ICR was also the basis for plans like PAYE, REPAYE, and SAVE, so it's impact is important.
This was confirmed by an infographic published by the Biden Administration in 2024, because the options available to borrowers due to the pending court cases depends on how the repayment plan was created:
Implications For Future Policy Changes
President Trump has previously said repayment plans created during the Biden Administration disproportionately benefit certain borrowers while increasing federal costs. Plans like SAVE or PAYE could face similar scrutiny in the future, given their administrative origins.
In contrast, the Congressional origin of IBR and PSLF makes these programs harder to change or eliminate. For borrowers, this is significant, particularly for those relying on PSLF’s promise of forgiveness after a decade of public service.
What the upcoming student loan reform is, it could profoundly impact millions of borrowers. While administrative changes can happen swiftly, Congressional programs remain relatively insulated, creating a patchwork system where borrowers’ benefits and responsibilities vary widely depending on the repayment plan they select.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.