Trump’s Student-Loan Overhaul Advances Amid Government Shutdown

UPDATE: The Department of Education is forging ahead with President Donald Trump’s ambitious student-loan repayment overhaul, even as the government shutdown enters its second week. Negotiations are set to continue, focusing on significant changes to borrowing caps and repayment plans that could impact millions of borrowers.

The department confirmed that discussions will persist despite the ongoing shutdown. On Monday, October 16, 2023, the Department of Education will commence its second week of negotiations with stakeholders, aiming to finalize the overhaul that was included in Trump’s “One Big Beautiful Bill,” signed into law in July.

Why This Matters NOW: This overhaul could redefine the financial landscape for countless students and professionals. With new caps on borrowing and modifications to repayment plans, the changes may force many borrowers to rethink their education financing strategies. Implementation of the new rules is targeted for July 1, 2026, leaving a limited window for adjustments based on feedback from this negotiation process.

During the first session, held in early October, the proposed changes included the elimination of the Grad PLUS program, which previously allowed graduate students to borrow the full cost of attendance. The new caps could limit graduate students to $20,500 annually, and a lifetime total of $100,000. For professional students, the cap would be $50,000 per year and $200,000 for their lifetime borrowing.

Critics, including Jeff Andrade, deputy assistant secretary for policy at the Department of Education, have emphasized the importance of moving forward. He stated, “Failure to actively continue work towards promulgating these regulatory changes would substantially impair otherwise funded programs, like Pell Grants and direct loans.” However, information from the department will not be publicly available until the shutdown concludes, limiting transparency during this critical process.

The new proposals also include replacing existing income-driven repayment plans with two options: a standard repayment plan and a new Repayment Assistance Plan. This new plan would allow borrowers to have their remaining balances forgiven after 30 years. Borrowers who take out loans before the implementation date will retain access to the existing income-based repayment plan.

Concerns have been raised about the list of qualifying degrees under the new borrowing caps. Some vital professions could be adversely affected. Bennett Boggs, commissioner of the Missouri Department of Higher Education & Workforce Development, voiced his apprehension during the negotiations, stating, “There are some professions here that are crucial to our state economic development and workforce development, and this list doesn’t have it, so I’m concerned this is going to really cripple certain aspects of what we’re trying to get done here.”

As negotiations continue, any final proposals will be opened for public comment before being finalized for implementation. With the stakes high for current and future borrowers, this situation remains fluid, and stakeholders are urged to stay informed as developments unfold.

Stay tuned for more updates as this critical overhaul progresses amidst the ongoing government shutdown.