Student debt relief’s uncertain future

Nov 11, 2024

Presented by The Association of American Universities

Donald Trump speaks at a campaign rally in Grand Rapids, Michigan.

Former President Donald Trump speaks during a campaign rally at Van Andel Arena in Grand Rapids, Michigan, on Nov. 5, 2024. | Jamie Kelter Davis for POLITICO

STUCK IN LIMBO: Student debt relief was a focal point for the Biden administration — but it’s unclear what will become of some of its programs under President-elect Donald Trump.

There are currently two proposed rules that would grant debt relief for those experiencing economic hardship. One is blocked by the courts and the other is still in the early stages of the rulemaking process.

One of their most popular student loan repayment programs known as SAVE, is also stuck in the courts, leaving about 8 million students in limbo. Trump has not publicly said what his next step would be on SAVE, but some conservative policy analysts expect him to do away with the plan altogether.

An Education Department under Trump would likely “ halt the policy itself” making the lawsuits against it “null and void,” said Jonathan Butcher, a senior research fellow at The Heritage Foundation, a conservative think tank that authored Project 2025.

Still, even if that were to happen, borrowers likely wouldn’t be expected to start making payments right away, said Scott Buchanan, who heads the Student Loan Servicing Alliance, a trade group for loan servicers. There is coding and technical work that needs to be done to undo the SAVE plan. It’s unclear how long it would take, but it could be months, he said.

“It certainly wouldn't be an overnight sort of reversal,” Buchanan added. “It's not a simple fix, if that's where the next administration goes.”

But some advocates say hope isn’t lost for all of Biden’s student debt relief efforts. Mike Pierce, the executive director and co-founder of the Student Borrower Protection Center, points to rhetoric Trump used at the presidential debate and his rallies.

He didn’t focus on blaming student loan borrowers or blaming Democrats for canceling student debt — instead, he chastised Vice President Kamala Harris for failing to deliver debt relief, Pierce noted.

“That tells you how Donald Trump himself thinks about the politics of student debt. I wouldn’t be so quick to write off these debt cancellation programs,” Pierce said. “It
seems like the former president understands that taking action that increases costs for working people is a political loser.”

IT’S MONDAY, NOV. 11. WELCOME TO WEEKLY EDUCATION. I’m your host, Rebecca Carballo. Let’s get coffee: rcarballo@politico.com. The team: Bianca Quilantan at bquilantan@politico.com, Juan Perez Jr. at jperez@politico.com and Mackenzie Wilkes at mwilkes@politico.com.

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Congress

MEETING THE DEADLINE: With the federal student aid form delayed yet again this cycle, lawmakers are continuing their push for a mandated October deadline.

The House Rules Committee is set to meet Tuesday to consider H.R. 8932, the FAFSA Deadline Act, which would require the Education Department to launch the form by Oct. 1, our Mackenzie Wilkes reports. The form typically launches on that October date, but federal law gives the agency until Jan. 1 to release it.

The measure was advanced by the House education committee in an overwhelmingly bipartisan vote (34-6) in July. The bill is now headed to the Rules Committee with a few additional measures, and it would require the Education secretary to certify to Congress by Sept. 1 whether or not the department will meet the Oct. 1 launch date.

The move to solidify the deadline comes after last year’s delayed and tumultuous rollout of the federal student aid form, which resulted in a nearly 9 percent drop in students completing the form.

The Education Department is launching this year’s FAFSA in a phased rollout to a limited number of students that began on Oct. 1, with the form expected to be available to all students by Dec. 1. More than 10,000 forms have been submitted since the agency began Beta testing, according to the department.

In the Courts

NONPROFIT STATUS: Three appeals court judges unanimously sided with Grand Canyon University on Friday, ruling that the Education Department wrongly denied the school's nonprofit status. They sent the case back to the agency to reconsider.

The 9th Circuit Court of Appeals judges ruled that the Education Department’s decision was “arbitrary and capricious.”

“The Department invoked the wrong legal standards by relying on IRS regulations that impose requirements that go well beyond the [Higher Education Act’s] requirements,” they wrote.

The Christian university is based in Phoenix, and it has both a physical campus and large online presence. It has been locked in a bitter dispute with the Education Department over the agency’s decision under the Trump administration to deny its request to convert from a for-profit university to a nonprofit.

Agency officials had said previously that the school was too financially intertwined with a publicly traded corporation, Grand Canyon Education, Inc., which previously owned the university and is now paid to manage key services, such as a marketing and financial aid, for the university.

Without the nonprofit status, the school wasn't eligible for federal grants and other federal funding, which it could use for research, said Brian Mueller, the president of Grand Canyon University. The university also wanted to build a development office to raise money, he said.

“We thought that was best for the long term legacy of the institution, and so we did it for the right reasons,” Mueller said of the effort to become a nonprofit. “We were shocked when [the Education Department] denied it.”

The Education Department did not immediately respond to a request for comment.

Your host has the full story here.

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MOVERS AND SHAKERS

RETIRING: University of Southern California President Carol Folt announced over the weekend her plans to retire on July 1.

Folt is known for her plans to boost athletics and expand computing programs, but she also received some criticism for how she handled the university’s pro-Palestinian student protests.

“After more than 20 years of leadership at three great universities, however, I am excited to embrace the freedom that comes with a next big leap, and to pass the baton to the next president who will be able to build upon our accomplishments and create a new chapter for this extraordinary institution,” Folt said in an announcement.

Syllabus

Texas A&M regents overrule faculty, cut 52 “low-producing” programs including LGBTQ+ studies minor. The Texas Tribune.

Oklahoma Department of Education abruptly cancels search for Bible vendor. The Oklahoman.

Will Trump curb transgender rights? After election, community prepares for worst. USA Today.

A message from AAU:

Through extension programs in states around the country, America’s leading research universities are bringing the latest science-based solutions to farmers and ranchers to help them increase crop yields, endure extreme weather challenges and improve their bottom lines. See how AAU members lead the way in agriculture to help support local farmers and their communities.