Trump Student Loan Policy: Winners and Losers

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While on the campaign trail, then-candidate Donald Trump promised he would make policy decisions to reduce the burden of student loan debt.

But has the president made good on his promises so far? The recent fight over the just-passed tax reform package, current budget proposals from the Trump administration, and legislation just introduced into Congress all point to an uncertain future for student borrowers. For some students, the latest changes to the system could mean financial savings. Others, though, could find themselves losing money.

Let’s take a look at the recent developments and what’s on the table to sort out who is likely to benefit from Trump student loan policy — and who could find themselves floundering.

Close call: Tax reform

Just before the holiday recess, the House and the Senate passed their reconciliation tax-cut bill. Originally, versions of the bill included an end to the student loan tax deduction, as well as a provision in the legislation calling for taxing graduate student tuition waivers.

More than 12 million Americans take advantage of student loan interest deductions, according to 2015 IRS data (the most recent available). Additionally, about 145,000 graduate students would have been impacted by suddenly taxing the value of their tuition waivers, according to the American Council on Education.

However, in the wake of graduate student protests, 31 Republican lawmakers sent a letter to party leaders asking them to leave tuition waivers alone. “Repeal of the income exclusion for graduate students would subject thousands of graduate students to a major tax increase at a time in their lives when they lack the ability to pay,” the letter said.

Efforts to eliminate these measures in the final tax bill succeeded, although they could be back on the chopping block in the future.

“No matter what happens now, remember that many of the provisions benefiting the middle class are set to disappear within a decade,” said Adam Minsky, a student loan lawyer. “Plus, who knows what will happen next year or the year after that. They’re always tinkering with the tax code, even if legislation isn’t always this sweeping.”

Not everyone thinks this was a close call, though. Preston Cooper, a research analyst in education policy at the American Enterprise Institute, believes that the student loan interest deduction is outdated, thanks to income-driven repayment.

“[N]ow that federal student loan borrowers are guaranteed an affordable payment, no matter their income, the deduction has become redundant,” he wrote in an opinion piece in Forbes.

Income-driven repayment winners and losers

The current budget proposal from President Trump suggests some potential changes to the way we handle college debt. For example, student loans would be streamlined into a single income-driven repayment (IDR) track, simplifying the current system.

All borrowers would benefit from a simpler system, according to the budget proposal. “[T]he numerous IDR plans currently offered to borrowers overly complicate choosing and enrolling in the right plan,” the budget document says. A single plan would get rid of the stress of choosing among different options and would reduce confusion surrounding repayment terms.

On the one hand, Minsky said, this could benefit undergraduate students whose debt would be paid off after 15 years on an income-driven repayment plan, rather than having to wait 20 or 25 years under the current system. However, when it comes to making your monthly payments, things could be a little rougher.

“Where this drifts into loser territory for undergrads is the higher cap on income-based plans,” said Minsky. “Right now, they only have to pay up to 10 percent of their discretionary income. Under this proposal, that goes up to 12.5 percent. Depending on your financial situation, that could be devastating to monthly cash flow.”

The biggest losers with the new IDR approach would be graduate students. Their IDR repayment plan doesn’t offer student loan forgiveness until 30 years have passed.

“This change is ambiguous for undergraduate borrowers and unambiguously negative for graduate borrowers,” Cooper said in a separate analysis of the administration’s budget blueprint. “But since making loans to graduate students is expensive, the savings are immense — an estimated $76 billion over 10 years.”

Could Public Service Loan Forgiveness disappear?

A big feature of Trump’s plans for student loans involves getting rid of Public Service Loan Forgiveness (PSLF). And it’s not just the Trump administration — Congress has also been thinking of taking an ax to the PSLF program. It could disappear under the recently proposed PROSPER Act.

“Anybody who is working a public service job is a loser if Public Service Loan Forgiveness disappears,” said Minsky. “Society as a whole could also lose out with the end of this program because one of the incentives to do some of the most essential jobs, like teaching, would disappear.”

The PSLF program allows those who work in qualified public sector and non-profit jobs to have their loan balances forgiven after making 120 consecutive on-time payments. The president’s budget proposal, though, argues that the country as a whole would win, as getting rid of PSLF would “help put the nation on a more sustainable fiscal path.”

Minsky pointed out that defunding PSLF through a budget proposal isn’t really feasible. Since the program was created by an act of Congress in 2007, it would take an act of Congress to get rid of it.

That’s where the PROSPER Act would come in. Its update of higher education policies would get rid of prior repayment plans — including PSLF — and replace them with fewer options. If the Trump proposal on PSLF isn’t adopted in a budget bill, Congress may do it separately.

New borrowers could lose with Trump student loans

At first, it looks like new borrowers could win with a provision in the PROSPER Act that gets rid of origination fees for federal student loans.

However, the Trump budget proposal also suggests ending subsidized student loans. If such a measure is adopted, it could increase the cost of college for attendees who already face income-related struggles.

“Eliminating subsidized loans would increase the cost of college by thousands of dollars for many of the six million undergraduates who receive those loans each year,” according to the blog run by the Institute for College Access and Success (TICAS), a non-profit higher education advocacy group.

Using interest-rate projections from the nonpartisan Congressional Budget Office, TICAS estimates that, without subsidized loans, currently eligible students would end up paying 16 percent more due to accrued interest charges and add $23.4 billion in costs to students over the course of 10 years.

“The added costs to students would be even higher if interest rates increase faster than current projections,” according to the TICAS analysis.

Would for-profit colleges be the big winners?

When looking at winners and losers from Trump student loan proposals, Minsky suggested looking beyond the White House budget and legislative pushes from Congress. “Don’t forget about what the Trump administration has been doing through the Department of Education with Secretary Betsy DeVos at the helm,” he said.

Since the beginning of her tenure, DeVos has rolled back rules designed to protect students from loan servicers. Additionally, critics have slammed the Department of Education for hiring former executives at student loan companies and for continuing to throw up “roadblocks” for defrauded students looking for debt relief after being misled by now-defunct colleges.

Some observers also see the PROSPER Act as a big win on behalf of for-profit colleges. “Where students are the losers under this proposal, the clear winners are for-profit colleges,” TICAS vice president Debbie Cochrane said in a statement.

One of the biggest targets of the PROSPER Act is what is known as the “90-10 rule.” This bars for-profit colleges from receiving more than 90 percent of their total revenue from student aid programs, while at least 10 percent must come from other sources.

Additionally, it ends the “gainful employment” rule, which punishes schools where typical graduates can’t afford their student loan payments. The idea is to discourage expensive schools from benefiting from useless programs that don’t lead to jobs with decent compensation.

The elimination of these rules isn’t seen as negative by everyone. “This proposal offers important reforms that emphasize good jobs and quality careers for our nation’s students,” Steve Gunderson, the president and CEO of Career Education Colleges and Universities (CECU), a trade group representing for-profit colleges, said in a statement.

Gunderson said these changes would provide his member campuses with the ability to outfit the workforce of the future.

However, Ted Mitchell, the president of the advocacy non-profit American Council on Education, released a statement taking issue with some parts of the PROSPER Act. While Mitchell expressed an interest in efforts to streamline student loan repayment processes, he also offered a warning.

“[W]e are deeply concerned that the proposal would undermine decades of federal policy aimed at helping students at the undergraduate and graduate levels afford a high-quality higher education,” he said. He cited the hike to interest charges on student loans and the elimination of “1.5 million financial aid grants” among his worries about the bill.

What can you do about your student loans?

No matter what happens in the future, said Minsky, your current loan program and repayment terms are likely to be grandfathered in. However, it’s important to be knowledgeable about your options, especially if rules governing servicers offer less protection to borrowers in the future.

For example, you should understand how student loan consolidation works, and learn your options with income-driven repayment. If you are concerned about private loans and escalating interest rates, consider refinancing your student loans.

And, of course, follow what’s happening with the current administration and in Congress. Changes to the system, whether they come from tax bills or legislation like the PROSPER Act, can impact your educational and financial future. Pay attention and contact your elected representatives to let them know your feelings on legislation.

“What we need is true higher education reform,” said Minsky. “Right now there’s a false divide between borrowers and taxpayers. But borrowers are already taxpayers, and you’re asking them to pay more while whittling down the flawed protection they have.”

Interested in refinancing student loans?

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1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit, email us at, or call 888-601-2801 for more information on ourstudent loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.

Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.

Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.

Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.

3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance:Fixed rates from 3.899% APR to 7.804% APR (with AutoPay). Variable rates from 2.470% APR to 6.990% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.470% APR assumes the current index rate derived from the 1-month LIBOR of 2.08% plus 0.64% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.

5 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of October 1, 2018, the one-month LIBOR rate is 2.22%. Variable interest rates range from 2.72%-8.32% (2.72%-8.32% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit We also have several resources available to help the borrower make a decision at, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a cosigner who is a U.S. citizen or permanent resident. The cosigner (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a cosigner will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Estimated average savings amount is based on 14,659 Education Refinance Loan customers who saved on loans between August 1, 2017 and July 31, 2018. The calculation is derived by averaging monthly savings across Education Refinance Loan customers whose payment amounts decreased after refinancing, calculated by taking the monthly payment prior to refinancing minus the monthly payment after refinancing. We excluded monthly savings from customers that exceeded $4,375 and were lower than $20 to minimize risk of data error skewing the savings amounts. Savings will vary based on interest rates, balances and remaining repayment term of loans to be refinanced. Borrower’s overall repayment amount may be higher than the loans they are refinancing even if monthly payments are lower.

2.47% – 6.99%3Undergrad
& Graduate
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2.47% – 5.87%1Undergrad
& Graduate
Visit Earnest
2.47% – 8.03%4Undergrad
& Graduate
Visit Lendkey
2.95% – 6.37%2Undergrad
& Graduate
Visit Laurel Road
2.48% – 6.25%5Undergrad
& Graduate
Visit CommonBond
2.72% – 8.32%6Undergrad
& Graduate
Visit Citizens
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.