Trump Student Loan Changes Risk 'Punishing Ambition'
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
Higher education experts have warned that President Donald Trump's plans to reduce student loan repayment options from borrowers could thwart "ambition and innovation."
In an effort to streamline student loan repayment, the Trump administration is considering a sweeping overhaul of its federal student loan programs, cutting back multiple income-driven repayment (IDR) options to just two. The plans were put forward in the GOP's One Big Beautiful Bill Act, which was passed by the House of Representatives on Thursday.
Currently, the federal student loan system offers several IDR plans that adjust monthly payments based on income and family size, which can offer relief for low-income borrowers, freelancers, and those in unpredictable job sectors. Under the proposed budget plan passed by the House, these options would be reduced to just two repayment structures: a standard 10-year plan and a "Repayment Assistance Plan."
Higher education experts and borrower advocates warn that the move may increase repayment costs, sacrifice flexibility and put vulnerable borrowers at greater risk.
"Consolidating repayment options into two streamlined plans may sound like simplification, but it could be a double-edged sword," Dr. Shaan Patel, CEO and founder of the standardized test prep and college admissions company Prep Expert, told Newsweek. "The current menu of repayment plans—while admittedly confusing—allows borrowers to match repayment to their financial circumstances."
Donald Trump and a student are seen in this composite image created by Newsweek.
Donald Trump and a student are seen in this composite image created by Newsweek.
Photo IllustrationStudent Borrower Protection Center has estimated that the new proposed repayment plan would increase payments by $2,928 a year for a typical student loan borrower enrolled in former President Joe Biden's Saving on a Valuable Education (SAVE) plan, if it is not blocked by the courts.
There is fear this reduced menu of options will also disproportionately impact borrowers whose financial lives don't fit neatly into a predictable mold.
"Many borrowers—particularly first-generation graduates, freelancers, or those entering volatile industries—depend on flexible, income-based options to stay afloat," Patel said. "If not, we'll see higher delinquency and default rates—especially among the borrowers this reform is supposedly meant to help."
Proponents argue that the simplified structure will reduce confusion that often leaves borrowers stuck in punishing repayment plans or facing unexpected interest growth. However, experts say the real issue isn't the number of choices—it's a lack of education about those choices.
"Confusion is a solvable problem with better education and outreach—not fewer choices. Imagine if we tried to fix the complexity of health insurance by only offering two plans. The outcome wouldn't be clarity—it'd be rigidity," Patel said.
The changes could also impact what future would-be students would pursue in higher education, Patel explained.
"Roughly 70 percent of federal borrowers rely on IDRs, especially early in their careers. These are often teachers, social workers, or entrepreneurs—people whose incomes are inconsistent but whose degrees provide immense long-term value," Patel explained. "If the new repayment model doesn't flex with income volatility, we risk punishing ambition and innovation in favor of uniformity."
"I would imagine that the new repayment plans would cover the vast majority of borrower situations," Jack Wang, host of the Smart College Buyer podcast, told Newsweek. "But I think the new rules will impact career choices, such as those entering the arts or fields that tend to have lower starting pay but yet require advanced degrees."
"If the proposed changes go through, my opinion is that higher education will be similar to what it was decades ago—only the kids from rich families can go to college," he continued. "And only those rich kids can go to medical, law, dental, vet school. It's kind of bleak."
The proposed changes are part of a broader budget bill that includes substantial cuts to federal student aid, including the elimination of loan forgiveness options after 20 or 25 years under current IDR plans. The bill also aims to repeal the SAVE plan, one of the Biden administration's centerpiece reforms, which reduced monthly payments for low-income borrowers and shortened the forgiveness timeline for smaller loan balances.
While the bill has passed in the House, it faces an uncertain future in the Senate, where it is expected to encounter stronger opposition.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
18 minutes ago
- Yahoo
Opinion - More renters are getting lawyers during evictions, and that's a good thing
Last year, landlords in Los Angeles filed almost 90,000 eviction cases. These cases are hard on tenants: Beyond just the immediate loss of housing, eviction leads to drops in income, higher rates of homelessness, serious health issues, and even increased risk of death. Yet the vast majority of Angelenos who navigate the complex eviction court process do so alone. That is about to change. Last month, Los Angeles joined 18 other cities, two counties, and five states across the nation where most or all tenants are guaranteed a lawyer when they go to court for an eviction. These 'right-to-counsel' programs improve outcomes for individual tenants, but their impact goes further: They can help to coordinate services, change the way the courts operate, and open up new possibilities for tenant organizing. As researchers who study eviction in the U.S., we urge more jurisdictions to push forward housing justice and stability for renters by extending the right to counsel. These programs are particularly important now. Over the last twenty years, rents have gone up much faster than incomes, leaving half of renters cost-burdened. Faced with these sorts of affordability challenges — and given evidence that homelessness is at an all-time high and rising — the federal government should be taking steps to protect renters. Instead, it is making the situation worse. The Trump administration is proposing shrinking the Department of Housing and Urban Development and gutting key benefits such as Housing Choice Vouchers. Right-to-counsel programs provide an example of what state and local governments can do to step into the leadership void created by federal retrenchment. Pop culture has sold us the myth that every defendant has the right to an attorney. But that's not true. Americans aren't necessarily guaranteed a government-funded lawyer when faced with a civil action such as debt collection, a child custody claim, or a landlord-tenant dispute. They're on their own unless they can afford a lawyer, and most people can't. These civil actions are far more common than criminal cases. In any given year, almost half of Americans have to deal with a civil legal case. Take eviction, for example. An average of 7.6 million Americans face eviction cases annually; only 4 percent of these tenants have lawyers to help them through this rapid, complicated, and deeply consequential process. That started changing in 2017, when New York City established the nation's first right to counsel program. Since then, this movement has expanded protections for renters in San Francisco, Baltimore, Detroit, and dozens of other places. Although programs differ in who receives access to a lawyer and when in the process they can get help, the basic idea is the same: to provide tenants with legal assistance during what may be their darkest hour. For tenants who now have lawyers, these programs make a world of difference. Eviction filings are less likely to result in a tenant being removed by court order, and even those that do result in evictions often leave the tenant owing less money. The benefits to health and well-being are also substantial. For example, the availability of right to counsel during pregnancy reduces adverse birth outcomes among newborns. At the end of the day, a lawyer cannot make up for missed rent. But in our work studying how jurisdictions have implemented right-to-counsel, we have seen how the presence of lawyers defending tenants can lead to wholesale culture shifts in civil courts — something that rental assistance and other one-time interventions don't achieve. We have seen courts where, rather than just rubber-stamping landlords' eviction cases, judges now inform tenants of their rights and postpone hearings to make sure that they are represented. Courts can become a place where advocates and social workers connect tenants with services and resources and diversion is a priority. To meet their full potential, state and local leaders need to provide the stable, long-term funding necessary to launch and run these programs right. That means adequate money for outreach and education so that tenants know that protections are available if they show up to court. It also means sufficient funding to ensure that enough lawyers are available, a challenge that the New York City program has faced. San Francisco provides a model of how to do this right, steadily increasing funding, even expanding support during the pandemic when other programs were being cut. Right to counsel programs are bringing change, justice, and hope for renters experiencing one of the most difficult challenges of their lives. As the federal government pulls back supports and reverses longstanding legal protections for low-income renters, it's time for state and local leaders to work together to expand protections like right-to-counsel in a sustainable way that can help as many families as possible avoid the irreversible fallout of eviction and the risk of homelessness. Peter Hepburn is an assistant professor of sociology at Rutgers University-Newark and associate director of Princeton University's Eviction Lab. Emily A. Benfer is a professor of clinical law at the George Washington University Law School and a research collaborator at the Princeton University Eviction Lab. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Yahoo
18 minutes ago
- Yahoo
Trump administration threat to end Harvard contracts puts research at risk
May 30 (UPI) -- The Trump administration is seeking to end all contracts it has with Harvard University, a move that adds to the strain between the federal government and America's researchers. The administration announced on Tuesday that it is in the process of reviewing its contracts with Harvard in preparation for their termination. The move may cost the United States a generation of top researchers, Sarah Spreitzer, vice president and chief of staff in the American Council of Education's government relations department, told UPI. "We're going to lose grad students or post-docs that might have been educated in those federally funded labs," Spreitzer said. "The undergrads are going to lose the opportunity of working alongside those researchers and learning from their work." Harvard has contracts partnering with government departments including NASA, Veterans Affairs, the Office of the Secretary in the Department of Commerce and the Small Business Administration. Dozens of these contracts have been entered into, extended or otherwise updated since President Donald Trump took office. Harvard University did not respond to requests for comment from UPI. One of the largest contracts Harvard holds with the government is a $15 million contract from the Department of Health and Human Services. It is described in the Federal Procurement Data System as a "task order for human organ chip enabled development of radiation countermeasures." It was entered into on July 26. Another of its largest contracts is a $10.6 million contract with the National Institutes of Health for tuberculosis research. Harvard holds more than one contract with the government related to this work. "They want to do more with less," Spreitzer said of the Trump administration. "They're making decisions based on budgetary impacts but that's layered on top of some of the regulatory actions that they are taking, which is really, again, slowing down or completely stalling the scientific process." The Trump administration has cut research funding grants to several universities, many of them Ivy League schools. It has also made cuts to programs in the National Institutes of Health, National Science Foundation and National Oceanic and Atmospheric Administration, among others that offer grant opportunities to universities. Since World War II, the U.S. government has leaned on universities to expand its research capabilities, leading to innovations in health, technology, economics and other disciplines. Spreitzer, who has been an advocate for higher education for 20 years. In that time she said she has interacted with nearly every federal agency, said the partnership has advanced the interests of the government and delivered value to U.S. taxpayers. "Right now we are at this historical inflection point where the federal government is rethinking their partnership with our institutions of higher education," she said. "It's been a very profitable and very important partnership that's helped the entire United States. Whether you're talking about new drugs or medical research or the innovative products that might be spun out and have created jobs." The rethinking of the partnership between the government and universities goes beyond contracts and grants. It is also proposing a lower cap on its reimbursement to universities for indirect costs or facilities and administrative costs. These are overhead expenses that an institution has that are not related to specific projects, such as government-funded research. Prior to the current Trump administration, the National Institutes of Health reimbursed an average of 27% to 28% of direct costs to universities to help cover indirect costs. These rates were negotiated with some institutions being reimbursed at rates more than 50%. There has not been a cap on most reimbursements since Congress removed them in 1965. In February, the National Institutes of Health announced a new policy to cap these reimbursements at 15%. The American Council on Education filed a lawsuit seeking to block the proposed cap, warning that it would greatly disrupt research across the country. Earlier this month, U.S. District Judge Allison Burroughs granted a preliminary injunction against the Department of Energy from instituting a rate cap policy. The injunction succeeds a temporary restraining order Burroughs granted against the administration, shielding all institutions of higher education from rate caps. "It would have a huge impact on our institutions," Spreitzer said. "They've also made huge cuts in some of the fellowship programs. Whether it's the fellowship program for the next generation of NSF scientists or whether it's the Fulbright program -- those have all been suddenly stopped."
Yahoo
18 minutes ago
- Yahoo
State implements reviews of Harvard visa applicants' social media accounts
The State Department has told U.S. consulates and embassies to immediately begin reviewing the social media accounts of Harvard's student visa applicants for antisemitism in what it called a pilot program that could be rolled out for colleges nationwide. The cable signed by Secretary of State Marco Rubio, obtained by POLITICO, was sent late Thursday. It says consular officers should 'conduct a complete screening of the online presence of any nonimmigrant visa applicant seeking to travel to Harvard University for any purpose.' The policy will take effect immediately, per the cable. The State Department did not immediately respond to a request for comment. The document puts into motion a proposal the Trump administration floated earlier this week for expanded social media vetting of all foreign students applying to U.S. colleges, pausing new appointments for student visa applicants in the meantime. Increased social media vetting did already exist, but it was previously primarily intended for returning students who may have participated in protests against Israel's actions in Gaza. It also adds to the White House's battle with elite academic institutions over alleged mishandling of cases of antisemitism during campus protests in response to Israel's military operations in the Gaza Strip against militant group Hamas. The cable specifically identifies antisemitism and antisemitic viewpoints as the focus for consular officers but does not spell out what specifically would rise to the level of inadmissible antisemitism in the eyes of State Department leadership. It says that the Harvard review process 'will also serve as a pilot for expanded screening and vetting of visa applicants' and that 'this pilot will be expanded over time,' indicating it will likely reach other universities in the Trump administration's crosshairs. Notably, State Department leadership wants consular officers to consider 'whether the lack of any online presence, or having social media accounts restricted to 'private' or with limited visibility, may be reflective of evasiveness and call into question the applicant's credibility.' The cable also instructs consular officers to inform applicants that private social media accounts could be viewed as evading vetting and request they make their accounts public while the Fraud Prevention Unit reviews their case. The new guidance comes as the U.S. government continues its showdown with Harvard for alleged failures to address antisemitism on campus amid the Israel-Hamas war in the Gaza Strip. The federal government has stripped Harvard of billions in research funding and entered in dueling litigation with the Cambridge, Massachusetts, school. It had also suspended Harvard's ability to enroll international students by briefly blocking visa applications before that decision was blocked by a federal judge. It also comes as the administration has targeted other academic communities, including Chinese nationals studying at U.S. colleges and universities. Rubio said Wednesday the administration would 'aggressively revoke' visas of Chinese nationals studying in sensitive fields, the potential implementation of which has flummoxed State Department officials.
