[Editor’s Note: Updated as of March 26, 2025]
Since the Trump Administration took office in January, it’s been a turbulent time for student loan borrowers. The Department of Government Efficiency or DOGE has been operating as a government agency to audit the existing federal government to eliminate waste, fraud and abuse. DOGE and the Trump Administration now have the Department of Education in their crosshairs.
Department of Education Under Fire
Linda McMahon, the newly appointed as Education Secretary, has been tasked with overseeing significant changes to the Department of Education. During her confirmation hearing, McMahon expressed support for honoring existing programs like Public Service Loan Forgiveness (PSLF), stating, “We certainly should honor those programs…that have been passed by Congress…yes, that’s the law”. This is vastly different from the first Trump Administration’s Education Secretary, Betsy Devos, who slow walked approvals. Fewer than 10,000 borrowers were granted PSLF during President Trump’s first term.
However, President Trump has also directed McMahon to “put herself out of a job” by working toward eliminating the Department of Education entirely. If this happens, the department’s functions wouldn’t disappear but would be redistributed across other federal, state, and local agencies. For instance, Federal Student Aid, which oversees student loans and repayment programs, might shift to the Department of Treasury. While this restructuring is still theoretical, it could lead to significant administrative changes and processing delays for borrowers in the future.
On March 11th, the Department of Education revealed plans to slash half of its staff. When the Trump Administration took office, there were 4,133 employees working at the there. Now there will be 2,183 employees. This move aligns with broader staff reductions across various government agencies under the current administration. While it’s too early to say what the reduction in force will do for the department, we feel it could further delay processing applications.
On March 24th, On March 20th, President Trump issued in executive order to abolish the Department of Education. In the Executive order it reads,
“The Secretary of Education shall, to the maximum extent appropriate and permitted by law, take all necessary steps to facilitate the closure of the Department of Education and return authority over education to the States and local communities while ensuring the effective and uninterrupted delivery of services, programs, and benefits on which Americans rely.”
Remember, there are key components of the Department of Education written into law by Congress that cannot be eliminated by an executive order. Student loans and the corresponding programs such as IDR and PSLF would remain intact. President Trump has asked that all student loan programs should be moved to the Small Business Administration or SBA. This is likely to be met with opposition as transitioning the student loan program departments would require Congressional approval.
Our overall thought is the Department of Education will not be shuttered.
Key Developments in Student Loan Programs
- Income Certifications Are Back On
At the end of February, the application to apply or switch IDR plans was frozen. However, as of March 26, 2025 they have now reopened the online application! You can apply for Pay As You Earn (PAYE), Income-Based Repayment (IBR) and Income-Contingent Repayment (ICR). The Saving on A Valuable Education (SAVE) and Revised Pay as You Earn (REPAYE) plans are not available for enrollment as the ongoing court case persists.
Many borrowers are now in a situation to decide whether or not they should switch repayment plans. If you are pursuing PSLF or IDR forgiveness, now is likely a good time to switch repayment plans if you were previously on the SAVE plan. If you are on SAVE and not pursuing a forgiveness program, sit tight, save your money, ride out the no payment interest freeze and be prepared for payments to resume later on this year.
Another consideration is loan servicers have moved back certification dates until February 2026 at the earliest.
If you need help selecting a repayment plan, schedule a time with us today!
2. PSLF Executive Order: New Eligibility Concerns
On March 6, 2025, President Trump issued an executive order titled Aligning Public Service Loan Forgiveness with Actual Public Service. This order aims to exclude certain organizations from PSLF eligibility if they engage in activities deemed to have a “substantial illegal purpose.” The order specifically targets employers involved in:
- Supporting illegal immigration
- Supporting terrorism
- Supporting child abuse (including gender-affirming care, as defined by the administration)
- Supporting violent protests
PSLF Basics Recap: To qualify for PSLF, borrowers must:
- Work at least 30 hours per week for a qualifying employer (e.g., a nonprofit, 501(c)(3), or government entity; CA and TX have exceptions)
- Have Direct federal student loans
- Be enrolled in an IDR plan
- Make 120 qualifying payments
The executive order won’t retroactively affect payments already credited toward the 120-payment requirement, but it could impact future eligibility for some borrowers. However, implementing this change requires a rulemaking process, which typically takes at least a year and involves public comment periods. Additionally, since PSLF was created by Congress in 2007 under the Bush Administration, altering its core structure likely requires Congressional approval (not just an executive order).
Legal experts predict this order will face challenges in federal court and not go anywhere. For now, PSLF remains a viable and cost-effective option for borrowers working in qualifying public service roles. That said, the uncertainty underscores the need for a contingency plan:
- What if PSLF is eliminated entirely?
- What if forgiveness amounts are capped?
- What if eligibility is restricted to borrowers below a certain income threshold?
While existing borrowers may be grandfathered into current PSLF rules, it’s wise to prepare for potential changes. One strategy is to start a PSLF side fund. A side fund is an emergency savings account to cover your loan balance if forgiveness is no longer an option. This acts as an insurance policy against career and legislative risk that don’t align with PSLF.
3. SAVE Repayment Plan: Still in Legal Limbo
The SAVE repayment plan has been under legal attack since July 2024. Multiple states challenged the plan, leading to a legal injunction that paused interest accrual, payments, and forgiveness progress. On February 18, 2025, the 8th Circuit Court of Appeals upheld the temporary injunction, sending the case back to the District Court for further review.
In parallel, a new Senate bill introduced in early 2025 threatens to eliminate the SAVE plan entirely. This bill is a reconciliation measure, meaning it can bypass a filibuster and pass with a simple majority. With Republicans holding a narrow Senate majority, the bill could move forward as early as mid-April 2025. If passed, borrowers on SAVE would likely be forced into other IDR plans like IBR, PAYE, or ICR, which often result in higher payments.
For now, borrowers on SAVE remain in a holding pattern, with no interest or payments due but no progress toward forgiveness either. If you’re on SAVE, consider:
- Exploring Alternatives: Other IDR plans may be your best option to continue your progress towards loan forgiveness or progressing to pay your loans down.
- Refinancing: If you don’t qualify forgiveness, refinancing to a private lender could lock in a lower interest rate and simplify your repayment. Don’t refinance your federal student loans until the interest freeze is over for SAVE.
What Borrowers Can Do Right Now
With so many moving pieces, it’s easy to feel overwhelmed. Focus on what you can control:
- Calculate Your Monthly Payment: Use our calculator to estimate your payments under different repayment plans, to select the most appropriate IDR plan.
- Evaluate PSLF Eligibility: If you’re pursuing PSLF, double-check your employer’s status and ensure your loans and repayment plan qualify. Start a PSLF side fund as a safety net.
- Consider Refinancing: If you don’t rely on federal benefits like forgiveness or IDR, refinancing could save you money on interest over the long term.
- Stay Informed: Policies are evolving rapidly. Follow updates from the Department of Education, Federal Student Aid, White Coat Investor.
Final Thoughts
The student loan landscape in 2025 is marked by uncertainty, but that doesn’t mean you’re powerless. Whether you’re navigating the IDR certification pause, assessing your PSLF strategy, or preparing for the potential end of the SAVE plan, proactive planning is key. If you’re feeling overwhelmed, don’t go it alone—schedule a consultation with a student loan professional to create a personalized plan tailored to your financial goals.
I’ll continue to monitor these changes and provide updates as they unfold. Stay tuned for more insights!
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