5 big questions to help you understand the current state of student loans

5 big questions to help you understand the current state of student loans

Washington is sending confusing and even contradictory signals to people with student loans. New repayment plans, reversals on wage garnishment for people in default and trouble getting staffers on the phone to clear up problems are adding to the lack of clarity.

Last year, the Consumer Financial Protection Bureau, a federal agency set up to help consumers, received more complaints about student loans than in any year in the history of the bureau. A quarter of those complaints were about delays in service or information, so if you’re not sure what’s going on, you’re not alone.

No one has all of the answers, but The Hechinger Report will tell you what’s known right now (and what’s not). (These answers only apply to federal undergraduate student loans. Graduate-school or Parent PLUS loans are going through separate changes.)

1. Did President Donald Trump make changes to student loans?

Yes, the Trump administration and Congress made changes last year that will affect borrowers this year.

• Three income-driven repayment plans will be phased out, including some of the most generous ones. That includes Saving on a Valuable Education (SAVE), which allows some borrowers to have their loans cleared after only 10 years with minimal regular payments; Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE).
• The Education Department has not yet set a deadline, but if you’re in one of those plans, you will need to enroll in one of two different plans within the next couple of years, and possibly sooner. One option is the existing Income-Based Repayment plan (IBR), which requires borrowers who took out loans after 2014 to pay 10% of their income for 20 years. The other is the new Repayment Assistance Plan (RAP), under which borrowers must pay a percentage of their monthly income based on overall earnings for 30 years before they qualify for loan forgiveness. RAP, which also ensures that borrowers who make regular payments won’t see their balances grow, will be available sometime in July 2026.
• The Trump administration also wants to change which employers may qualify for the Public Service Loan Forgiveness (PSLF) program. The structure remains, but a new rule could narrow the definition of the kinds of jobs that qualify for loan forgiveness. The proposed rule raises concerns that borrowers working for groups that assist immigrants or transgender youth, for example, could be disqualified from loan forgiveness.

2. Did President Trump freeze student loans?

No, President Trump did not freeze student loans. The administration did decide to pause its previously announced plan to garnish wages and seize the tax refunds of borrowers who are in default, at least temporarily. The decision came after advocates expressed concern that the millions of borrowers currently in default could be thrown into severe economic hardship. The administration says it will make “significant improvements to our broken student loan system” before proceeding, but did not give a timeline.

3. Is there still student loan forgiveness?

Yes, there is still loan forgiveness, but the Trump administration has tightened the rules and it will likely take longer and cost more before your loans are forgiven (unless you are in the Public Service Loan Forgiveness program, which hasn’t been altered). Large-scale student loan forgiveness programs pushed by the Biden administration have either been ended by the Trump administration or struck down by the Supreme Court.

4. How long do you have to pay off student loans?

The amount of time you have to pay your loans depends on your plan; most income-based repayment plans range between 20 and 30 years, while standard plans take 10 years, although you can always pay them off more quickly by increasing the size of the payments. Borrowers facing financial hardships, health issues, military deployment or other situations listed here can apply for deferment or forbearance (economic and unemployment-related deferments will be eliminated and long-term forbearances will be capped starting in July). Both allow you to stop payments for a period of time, but interest will continue to accrue if you go into forbearance. Sometimes switching to an income-driven plan, if you’re not already on one, can be cheaper than pausing your payments altogether.

5. Is there a way to pay off student loans quickly?

The main way to pay off student loans more quickly is by paying more than the minimum payment required (unless you’re in an income-driven repayment plan, in which case it depends on how much you owe and how quickly you will get to forgiveness). Some people also use their bonuses or tax refunds to pay down their total. Sometimes consolidating your loans can work in your favor, but it’s usually not a good idea to take out additional loans or overload your credit card since those interest rates are often much higher and more unpredictable.

This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education, and reviewed and distributed by Stacker.