Will Student Loan Forgiveness Get Rolled Back In 2025? 4 Things to Watch

It’s a new year of uncertainty for millions of student loan borrowers.While the Biden administration has seen some big wins in providing student loan forgiveness and other debt relief – particularly through Public Service Loan Forgiveness (PSLF), the Total and Permanent Disability (TPD) discharge program, and Borrower Defense to Repayment – other initiatives are effectively dead or in limbo, while the future of other student loan forgiveness programs remains unclear.One thing appears certain – mass student debt relief is not happening.The Supreme Court ended President Biden’s first attempt at broad student loan forgiveness in 2023.

And last month, the Biden administration withdrew regulations for so-called “Plan B” student loan forgiveness and hardship loan forgiveness, which together could have benefited more than 30 million people.With legal challenges pending and the incoming Trump administration likely to nix these initiatives, the Biden administration opted to pull the plug.The future of other student loan forgiveness options is less clear.But their fate will probably be decided sometime in 2025.

Here’s what borrowers should keep an eye on in the coming months.1.Student Loan Forgiveness and Lower Payments Under the SAVE Plan The SAVE plan has been blocked due to a federal appeals court injunction since August.SAVE is the Biden administration’s newest income-driven repayment (IDR) plan with lower payments, generous interest subsidies, and (in some cases) faster student loan forgiveness compared to most other IDR plans.

More than eight million borrowers had enrolled in SAVE or switched over from other plans before a coalition of Republican-led states filed a legal challenge to the program, culminating in the current injunction.These borrowers are now stuck in a forbearance, during which time no payments are due and no interest is accruing, but the period won’t count toward student loan forgiveness for either IDR or PSLF.The injunction is technically temporary while the litigation continues.But the 8th Circuit Court of Appeals – the court handling the case and that issued the injunction – has suggested that the SAVE plan could ultimately be overturned.

“There have been no final decisions yet,” said the National Consumer Law Center in a blog post update this week.“We anticipate that as this litigation continues, there may be more orders that create more upheaval.” Republican lawmakers have also expressed hostility toward the SAVE plan.It’s possible that if the 8th Circuit does not fully overturn the program, the Trump administration could take steps to repeal it through the same regulatory process that created it.2.

Repeal of IDR Student Loan Forgiveness But it’s not just the SAVE plan that’s in danger.The legal challenge targeting the SAVE plan also suggests that student loan forgiveness under Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE) should also be disallowed, and the 8th Circuit is considering whether to bar student loan forgiveness under these longstanding plans, as well.“The states challenging the SAVE plan asked the court for a preliminary injunction ordering the Department of Education to stop applying the SAVE regulations while the lawsuits are ongoing,” explained NCLC in its blog post.“This has already resulted in a number of conflicting and changing court orders temporarily blocking different parts of the plan as well as other portions of the rules applicable to ICR and PAYE.

This has caused tremendous disruption and confusion for borrowers.” The Income-Based Repayment (IBR) plan, established separately by Congress, is not blocked and is not being challenged.At the same time, some Republican lawmakers are pressing ahead with plans to replace the entire IDR system – covering all existing IDR plans, including IBR – with a new income-driven plan.This new plan would mirror the PAYE and IBR plans in terms of how monthly payments are calculated, but it would eliminate student loan forgiveness after 20 or 25 years.Instead, borrowers could only qualify for loan forgiveness once they have paid at least the amount that they would have paid under a 10-year Standard plan.

This may be an impossible threshold for certain borrowers to meet, especially those who are lower-income.The implication is that many borrowers could effectively be trapped in debt for their entire lives.Some House Republican leaders are pushing for these student loan reforms to be included in an upcoming “mega-bill” that will be primarily focused on taxes and the border.It’s too soon to know at this time if any student loan forgiveness repeal provisions will make into this legislation, but we may know more soon in just a few months.

3.Borrower Defense to Repayment Thousands of Borrower Defense to Repayment (BDTR) applications have also been held up due to legal challenges.The BDTR program provides a pathway to loan forgiveness for borrowers who were misled or defrauded by their schools, such as through misrepresentations of admissions criteria or career prospects.The Biden administration has approved hundreds of thousands of borrowers for BDTR relief through group discharges associated with attendance and specific institutions, such as Corinthian Colleges and ITT Technical Institutes.

But many of these borrowers are still waiting on relief, and it is unclear if they will receive discharges before the Trump administration takes over.Meanwhile, new borrower-friendly BDTR regulations that went into effect in July 2023 remain blocked by the 5th Circuit Court of Appeals due to a legal challenge brought by a group of schools.The new rules would have expanded the categories of misconduct that would be the basis for BDTR relief, and made it easier for borrowers to qualify by eliminating a statute of limitations and easing the burden of proof.The Education Department has paused processing of many BDTR applications due to the injunction.

But as with the SAVE plan, the future of these BDTR regulations remain in doubt.The 5th Circuit has signaled a likelihood that the new rules will ultimately be overturned.If that doesn’t happen, the Trump administration or Congress could take steps to repeal them.If the rules are repealed, it would leave in place an older set of BDTR regulations created during the first Trump administration that added new restrictions for borrowers seeking relief under the program.

4.Public Service Loan Forgiveness Unlike many other student loan relief initiatives, Public Service Loan Forgiveness (PSLF) remains intact and not subject to a legal challenge.PSLF can provide complete federal student loan forgiveness in as little as 10 years for borrowers who meet all program requirements while working in qualifying nonprofit or government employment.More than a million borrowers received student loan forgiveness through PSLF during the Biden administration due to a series of improvements and reforms.

Because PSLF was expressly created by Congress, a president cannot simply eliminate the program.Congress would have to pass new legislation that fundamentally alters or repeals PSLF.While that’s certainly possible, a proposal to do just that during the first Trump administration failed to gain any traction.It also would have grandfathered in current borrowers, meaning the repeal only would have applied to new borrowers after the legislation had passed.

The student loan forgiveness reform bill proposed by House Republicans currently does not include a repeal of PSLF, so it is too soon to know if any serious effort will be made to change or eliminate this popular loan forgiveness program.But borrowers on track for PSLF should keep an eye out for proposals this year.