Recent policy changes under President Donald Trump’s administration have sparked concerns among student loan borrowers, with many wondering whether their monthly payments are about to rise. These changes stem from a series of executive actions that aim to restructure the U.S. Department of Education and overhaul student loan management. But what do these changes really mean for borrowers, and how might they affect repayment plans? Here’s what you need to know.

Dismantling the Department of Education

One of the most significant actions taken by the Trump administration is the decision to dismantle the U.S. Department of Education. In March 2025, President Trump signed an executive order to shift key functions of the department to other federal agencies. According to the White House, the move aims to reduce federal control over education and return decision-making power to states and local communities.

A major aspect of this transition is the transfer of the federal student loan portfolio—worth approximately $1.6 trillion to the Small Business Administration (SBA). This change raises concerns, as the SBA has no prior experience managing student loans, which could lead to disruptions in payment processing and loan servicing. (White House Statement)

Changes to Student Loan Repayment Plans

Suspension of Income-Driven Repayment Plans

In February 2025, the Department of Education temporarily suspended applications for Income-Driven Repayment (IDR) plans, which help borrowers by adjusting their monthly payments based on their income and family size. This suspension was prompted by a federal court ruling that put a hold on parts of President Biden’s Saving on a Valuable Education (SAVE) plan.

As a result, borrowers were unable to enroll in or recertify existing IDR plans, leaving many facing significantly higher monthly payments. In some cases, payments reportedly increased from $500 to nearly $5,000. (Federal Student Aid Update)

Although applications for IDR plans have since reopened, delays are expected as servicers adjust their systems to comply with the court ruling.

Public Service Loan Forgiveness Program Adjustments

Public Service Loan Forgiveness (PSLF), a program that forgives federal student loan debt for borrowers who work in qualifying public service jobs, has also seen changes. A new executive order has altered eligibility criteria, excluding organizations that engage in activities deemed to have a “substantial illegal purpose.”

While the administration claims the goal is to ensure taxpayer funds do not support activities related to illegal immigration, discrimination, or public disruptions, the order has raised concerns about its broad language and the potential exclusion of nonprofit employees. (White House Fact Sheet)

Impact on Student Loan Borrowers

The restructuring of the student loan system and the suspension of IDR plans have left borrowers with several uncertainties.

1. Higher Monthly Payments: With some IDR plans temporarily suspended, borrowers who do not qualify for other repayment plans may see their monthly bills increase dramatically.
2. Loan Servicing Disruptions: The transfer of loan management to the SBA could lead to customer service issues, payment processing delays, and confusion about repayment terms.
3. Public Service Loan Forgiveness Uncertainty: Workers in certain nonprofit sectors are now unsure whether they will still qualify for PSLF, potentially derailing their long-term debt relief plans.

According to financial experts, these policy changes could impact millions of borrowers, particularly those relying on lower monthly payments through IDR plans. (Federal Reserve Economic Data)

Department of Education Workforce Cuts

In addition to policy shifts, the dismantling of the Department of Education has led to a significant reduction in staff. Approximately 1,300 positions have been eliminated, and an additional 600 employees have either retired or resigned voluntarily.

This downsizing has affected the processing of financial aid applications and loan servicing, resulting in longer wait times for borrowers seeking assistance. Schools have also reported delays in receiving federal funding for K-12 education programs. (NPR Report)

What Should Borrowers Do?

Given these major changes, borrowers should take proactive steps to manage their student loan debt effectively.

1. Stay Informed

Regularly check updates from official government sources, such as the Federal Student Aid website (studentaid.gov), to stay informed about policy changes and their potential impact.

2. Review Your Repayment Plan

Use the Department of Education’s Loan Simulator (Loan Simulator) to explore different repayment options and determine the best strategy based on your financial situation.

3. Document Everything

Keep a record of all loan-related communications, including payment history, correspondence with loan servicers, and any changes in repayment plans. This documentation will be useful in case of disputes or errors.

4. Seek Financial Guidance

Consider consulting a student loan counselor or financial advisor to discuss alternative repayment strategies, particularly if your monthly payments are increasing.

Conclusion

The Trump administration’s student loan changes mark a major shift in federal education policy, with significant consequences for borrowers. While some argue that the restructuring will reduce government inefficiency, others fear that disruptions in loan servicing and repayment plans will create financial hardship for millions.

For now, borrowers should remain vigilant, explore available repayment options, and advocate for clear, borrower-friendly policies. As these changes continue to unfold, staying informed and prepared will be the best defense against unexpected increases in student loan payments.