Recent changes to student loan repayment plans under the Trump Administration are leading to confusion and frustration for more than 42 million borrowers, including processing pauses many fear could cost them even more money.
The Department of Education has stopped enrollment in four popular federal student loan repayment plans offering affordable payment options, even student loan forgiveness. This comes on the coattails of a February court ruling, blocking Biden-era programs such as income-based repayment, pay-as-you-earn, and income-contingent repayment plans adjusted based on a borrower's income and family size, such as the SAVE Plan, often including loan forgiveness.
Now, student loan borrowers are in a state of limbo, not only with this, but with delays in processing until at least June 1 and a suspension of access to the plans. It's a pause that many fear could lead to higher interest payments. Even more recently, the Trump Administration has unveiled plans to re-home the student loans of those millions of borrowers from the DOE to the Small Business Administration.
For borrowers we've spoken with, this only adds confusion and stress to the equation, and experts agree as the SBA does not have experience with such loans and is reportedly on track to get their staff cut nearly in half — to the tune of 43%, or about 2,700 positions as part of reorganization efforts to return to pre-pandemic staffing levels and "eliminate wasteful spending." Not to mention, the already rising cost of living across the U.S.
So in this apparent era of push-and-pull, what can you do as a current borrower? After checking in with local colleges and universities along with the state DOE which handles matters dealing with K-12 education, we were directed to the Louisiana Office of Student Financial Assistance for advice. We reached out to a spokesperson there and received the following statement:
"The Louisiana Office of Student Financial Assistance administers the state of Louisiana’s scholarship and grant programs as well as the state’s 529 and 529A saving programs. Student loan programs are operated at the federal level. Decisions and updates regarding them come from the federal government. Any information or guidance we would share regarding federal student loans would come from the links we have provided."
You can access those links here, here, and here.
While that June 1 deadline is on the horizon, it's still unclear from the DOE as to when this processing pause will end.
