One year after President Donald Trump signed his core domestic policy package into law, student loan borrowers are bracing for a major overhaul of the federal lending system that will begin this week. Many were already struggling when the Biden administration attempted to enact sweeping student debt relief in the wake of the Covid pandemic, but the proposal encountered Republican blowback.
Changes to the System
Under the Trump administration’s changes, borrowers will experience a range of effects, with some seeing little difference in what they owe each month, while many lower-income borrowers will be hit the hardest with increases. The new direction is part of the Trump administration’s broader goal of slashing funding from government assistance programs across federal agencies.
The federal student aid program will be transferred from the Education Department to the Treasury Department, which administration officials say is better equipped to get debtors into compliance because it collects defaulted debt for federal and state agencies. The White House has accused the Biden administration of focusing too heavily on student loan forgiveness and debt cancellation instead of ensuring loans are repaid in an effort to curtail federal spending and pressure colleges to lower tuition costs.
Impact on Borrowers
Student borrower Lori Correa, of North Carolina, is concerned about the changes and weighing her options. After using an online loan simulator, she said she estimates her monthly student loan payments would jump from $150 to $713 under one of the new plans because of changes in how payments are calculated. Correa, a single mother of three, earns about $60,000 a year as a real estate agent’s personal assistant and still owes roughly $200,000 in student debt.
In the first quarter of 2026, almost 43 million student borrowers carried nearly $1.7 trillion in loans, according to Federal Student Aid statistics. An additional 2.6 million student loan borrowers fell into default for nonpayment, a Federal Reserve Bank of New York report found.
Original reporting: Dallas TX News (HLL/CB) — read the source article.
