• Alrena Dale, 61, got $155,000 in student loans discharged through bankruptcy.
• Biden's new bankruptcy guidance, aimed at easing the process for borrowers, made that possible.
• Some attorneys told BI that the new guidance is a big help, but more outreach would be helpful.

Alrena Dale, 61, had her six-figure student-loan balance wiped out after decades of payments. She's one of hundreds of borrowers who have received relief after new changes to the bankruptcy process.

Though Dale filed over five years ago, President Joe Biden's new bankruptcy guidance, which streamlined the information she needed to provide in order to qualify for relief, was a turning point in her case.

In August 2023, Dale was finally relieved of her $155,000 balance, according to documents reviewed by Business Insider.

"There were no words. I was excited. I cried," Dale, who'd attended an online business bachelor's and master's program but struggled to find employment in her field, told BI. She worked multiple minimum-wage jobs at a time to afford her student-loan payments alongside her monthly expenses. "I really honestly didn't believe it until I got my discharge papers."

The reason it was so difficult for Dale and many other student-loan borrowers to seek relief in bankruptcy court before 2022 is that borrowers had to prove an "undue hardship" standard, in which they had to show that they cannot maintain a minimal standard of living, that their circumstances aren't likely to improve, and that they have made a good-faith effort to repay their debt.

That standard was an extremely high bar for borrowers to meet. The Biden administration's guidance changed that by establishing clearer guidelines for borrowers to meet undue hardship, and it allowed borrowers to complete a self-attestation form, allowing the bankruptcy process to move quicker and avoid investigations into their backgrounds.

Some bankruptcy attorneys told BI that the new guidance has made student-loan bankruptcy much more achievable for borrowers, with some having seen quick success after decades of stagnancy. Still, they said many lawyers are reluctant to lean into the new process, and more outreach and education on navigating bankruptcy for student loans would help.

Dale said the overwhelming emotion she now feels is relief.

"Knowing that I don't have to go out and work a second job just to pay it back because they've removed it for me, I really can't thank them enough," Dale said. "I have no words because I'm just happy and grateful and thankful."

'It's given us so much hope'

Bob and Tammy Branson, a bankruptcy attorney and senior paralegal, respectively, successfully represented Dale in her bankruptcy proceedings.

Tammy said that over the past 25 years, it was nearly impossible to discharge their clients' student loans in bankruptcy — but after the new guidance, she said their law firm has successfully discharged over $1 million in student loans.

"Now we're actually getting people not just to the point of treading water, but we're getting them out of the water," Bob said.

Dustin Baker, a bankruptcy attorney in Iowa, has seen similar success with the new guidance. Baker told BI that before November 2022, he advised his clients that considering a student-loan discharge wasn't worth their effort because it was so difficult to achieve, and he didn't want to take his clients' money for litigation he wasn't confident would be successful.

But once the guidance was announced, Baker said he's eliminated student debt for about a dozen of his clients, with a few more in the pipeline. He said his "biggest excitement" with the new process is the self-attestation form, which directly tells borrowers the questions they need to answer to get approved for a discharge, making communication between the borrower and the government easier.

The Justice Department released new data in July on how the process was going since the new guidance was announced. It showed that 588 new cases were filed from October 2023 to March 2024 — a 34% increase from the prior 6-month period. New data BI obtained from Sen. Elizabeth Warren in October showed that nearly 900 borrowers sought out the process in fiscal year 2024, and 85% of borrowers who filed using the new guidance received a full or partial discharge.

Baker said his experience incorporating the new guidance into his work was "very easy," and he added that members of the Justice Department gave attorneys in his area training sessions. However, Tammy and Bob said more education and outreach would be helpful because some lawyers are unsure if the new process is worth it.

Still, it's clear the guidance works, and Tammy said she hopes that continues.

"It's given us so much hope," she said.

'I would've had to work another job'

The new bankruptcy process for student-loan borrowers still isn't perfect. Igor Roitburg, a former attorney and senior managing director at Stretto — a bankruptcy services and technology firm — told BI that the timeline for borrowers to receive a bankruptcy decision can still widely vary and that uncertainty is a roadblock for some borrowers and attorneys to participate.

"For them to invest time and effort into a new process that they're uncertain about if they don't see results for months and months and months, makes it hard for them to commit to the process and offer it as a global service to all their clients," Roitburg said.

Dale said she saw no other option but to file for bankruptcy, regardless of whether it would be successful. Once the new guidance was released, the self-attestation form allowed Dale to prove that her financial circumstances were unlikely to improve, qualifying her for relief.

She now works at a call center and said she can't afford to retire yet. If she had the opportunity to do things differently, she might have considered going to a trade school to avoid the student-debt burden.

"I'm just making the best of what I have to work with right now," she said, adding that if she didn't see success through bankruptcy, "I would've had to work another job just to pay the student loans."

Have you successfully discharged your student loans in bankruptcy? Are you struggling with the process? Share your story with this reporter at [email protected].

• Biden's administration posted notices to withdraw its broader student-loan-forgiveness plans.
• Amid lawsuits, the Education Department wrote that it stands by the legality of its debt-relief plans.
• The plans aimed to cancel some student debt for over 38 million borrowers.

President Joe Biden's administration has officially scrapped its unfinished rules for broad student-loan forgiveness.

The Education Department posted notices to withdraw its plans to cancel student debt for over 38 million borrowers. The withdrawal notices were for two of the department's unfinished debt-relief rules. The first rule was Biden's Plan B for broader debt relief after the Supreme Court struck his first plan down in summer 2023. The second rule was a proposal to provide relief to borrowers facing financial hardship.

In the notices to withdraw the unfinished rules, the Education Department said it is focused on helping student-loan borrowers manage the remaining elements of the return to repayment that began last year following the pandemic pause.

The department said that withdrawing these regulations will give future stakeholders the flexibility to craft new forms of relief, especially with the uncertainty the incoming administration brings. Trump has previously criticized broad relief and is unlikely to continue Biden's efforts.

The department also said that the withdrawal of these rules is not a result of the questions surrounding their legality, saying that it believes the relief "is authorized by the Secretary's longstanding and existing authority" under the Higher Education Act.

Biden's Plan B for student-loan forgiveness would have benefited over 30 million borrowers. It proposed full or partial relief for categories including borrowers with unpaid interest and those who have made at least 20 years of payments. While the rule was never finalized, a group of GOP-led states filed a lawsuit in September to block its implementation.

Meanwhile, the Education Department proposed a separate rule in October to provide relief to 8 million borrowers facing financial hardship. Those categories would have included borrowers facing challenges with childcare or medical expenses.

The Education Department did not immediately respond to a request for comment from Business Insider on the withdrawal of the plans.

Biden is still pursuing other avenues for debt relief before his term is up. On Friday, his administration announced an additional $4.28 billion in debt relief for 54,900 borrowers in Public Service Loan Forgiveness — a result of ongoing improvements to the program. Despite not being able to pass broad relief, Biden, over the course of his term, has provided relief to nearly 5 million borrowers through changes to various programs.

Some Republican lawmakers lauded the withdrawal of the plans. Sen. Bill Cassidy, the top Republican on the Senate education committee, said in a Friday statement that Biden's "student loan schemes were always a lie."

Meanwhile, some advocates criticized the GOP-led challenges to Biden's relief efforts. Persis Yu, the deputy executive director of the advocacy group Student Borrower Protection Center, said in a statement that Biden's plans "would have freed millions from the crushing weight of the student debt crisis and unlocked economic mobility for millions more workers and families."

"We are deeply grateful to President Biden for the work he did to fight for the 40 million borrowers trapped in student debt," Yu said.

• Biden announced $4.28 billion in student-debt cancellation for 54,900 borrowers in Public Service Loan Forgiveness.
• The relief is a result of the Education Department's ongoing fixes to PSLF.
• President-elect Donald Trump is unlikely to continue Biden's student-debt relief efforts.

President Joe Biden announced more student-loan forgiveness with one month left until he leaves the White House.

On Friday, Biden and his Education Department said they have approved $4.28 billion in student debt for 54,900 borrowers in the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.

The relief is a result of ongoing improvements to PSLF, including a waiver that expired in October 2022 that allowed payments that previously did not qualify for relief to count toward borrowers' forgiveness progress.

"Four years ago, the Biden-Harris Administration made a pledge to America's teachers, service members, nurses, first responders, and other public servants that we would fix the broken Public Service Loan Forgiveness Program, and I'm proud to say that we delivered," Education Secretary Miguel Cardona said in a statement.

This latest relief brings the total student-loan forgiveness under Biden to about $180 billion for nearly 5 million Americans, including $78 billion for just over 1 million borrowers enrolled in PSLF.

It's unclear if the Biden administration will announce more student-debt relief before President-elect Donald Trump takes office on January 20. Still, it caps off a tumultuous past few years for student-loan borrowers hoping for broad debt relief — Biden's first student-loan forgiveness plan was struck down by the Supreme Court last summer, and his Plan B for debt relief is now in court following legal challenging from Republican-led states.

On top of that, 8 million borrowers enrolled in the SAVE plan — Biden's new income-driven repayment plan intended to make monthly payments cheaper with a shorter timeline to forgiveness — are in limbo as they wait for a court to decide if the plan can move forward.

Even if Biden's plans for broader relief do survive their legal challenges, it's unlikely Trump's administration would continue those efforts. Preston Cooper, a senior fellow at the conservative-leaning American Enterprise Institute, previously told Business Insider that Biden "has taken a stance of, 'We want to try and forgive as much debt as possible through various different programs.'"

"And to put it mildly, we're not going to see that same attitude under the Trump administration," Cooper said.

Trump proposed eliminating PSLF during his first term, but doing so requires congressional approval. Republican control of Congress and the White House means that Trump would likely have more success achieving his goals.

"From Day One of my Administration, I promised to make sure that higher education is a ticket to the middle class, not a barrier to opportunity," Biden said in a statement. "Because of our actions, millions of people across the country now have the breathing room to start businesses, save for retirement, and pursue life plans they had to put on hold because of the burden of student loan debt."

• Sen. Elizabeth Warren led over 20 colleagues in requesting the CFPB and FTC investigate student-loan company Navient.
• They said they're concerned that Navient might be improperly denying defrauded borrowers debt relief.
• Navient said it's committed to getting relief to borrowers, but the discharge process is still in its early stages.

A group of Democratic lawmakers said that a major student-loan company is denying some student-loan borrowers relief that they might qualify for.

Sen. Elizabeth Warren led over 20 of her Democratic colleagues, including Rep. Alexandria Ocasio-Cortez and Sen. Ron Wyden, in sending a letter Wednesday to the Consumer Financial Protection Bureau and the Federal Trade Commission urging an investigation into the student-loan company Navient.

In the letter, viewed exclusively by Business Insider, the lawmakers wrote that Navient's process to cancel student loans for borrowers who said their schools defrauded them is "flawed, convoluted, and opaque," and it may have resulted in borrowers being "improperly" denied relief they qualified for.

A process known as the borrower defense to repayment allows borrowers with federal student loans to apply for debt cancellation if they believe their schools defrauded them. If approved, the government would wipe out their balances.

However, borrowers with private loans held by Navient cannot access the federal process. Instead, they can request a school misconduct application from Navient, and Navient would then decide whether to approve it.

The company previously said it's committed to addressing all "valid" misconduct claims.

The issue, the lawmakers wrote, is that Navient has denied relief for the majority of borrowers who applied. Navient wrote to Warren and her colleagues in a September letter, viewed by BI, that the company services about 65,000 borrowers who attended for-profit schools. As of September, Navient has sent 4,233 borrowers a school-misconduct discharge application, and 1,801 borrowers have submitted applications. Of the 1,061 applications Navient fully reviewed, 238 borrowers have been approved for relief, and 823 have been denied.

Navient wrote to the lawmakers that borrowers' applications are "carefully reviewed" by a legal team to determine eligibility for debt cancellation, and to date, it has approved over $8 million in relief. Still, the lawmakers said that the denials do not contain sufficient explanations, "leaving a fraction of Navient's borrowers who attended predatory, for-profit colleges with the relief that they deserve."

BI previously spoke to some borrowers who have attempted to navigate Navient's school misconduct application process. Nick Eucker, 38, said he received an application from Navient, and after submitting 200 pages worth of paperwork in support of his claim he was defrauded, Navient denied his application. The only reasoning he was provided was: "You do not meet the requirements for discharge based on misconduct by your school."

A Navient spokesperson previously said that the discharge process is still in its early stages, and the company expects more borrowers to see relief as it rolls out.

Still, the lawmakers said that Navient has the authority to cancel the loans of impacted borrowers without requiring a lengthy application process.

"Navient should cancel all of the private fraudulent debts for borrowers who have been harmed by its misconduct," they wrote, "all of whom the company is able to identify without an application."

• Democratic lawmakers urged Biden to cancel student debt for defrauded borrowers before Trump takes office.
• Some borrower defense applications are still pending, and lawmakers are pushing for prompt relief.
• Biden has canceled student debt for over 1 million borrowers defrauded by their schools.

A group of Democratic lawmakers want President Joe Biden to quickly process student-debt cancellation applications for thousands of borrowers before it's too late.

On Wednesday, 75 Democratic lawmakers, led by Sens. Dick Durbin and Ed Markey and Rep. Maxine Waters, sent a letter to Education Sec. Miguel Cardona urging him to discharge unprocessed borrower defense applications, which are applications student-loan borrowers can submit if they believe they were defrauded by the school they attended. If approved, the loans they took out to attend that school would be discharged.

With President-elect Donald Trump taking office in under two months, the lawmakers said debt relief would become a lot more uncertain under his leadership.

"We're here today to demand that the Department of Education deliver on President Biden's commitment to debt relief and process all outstanding borrower defense relier before President Trump slams the door shut on borrowers on January 20," Markey said during a Wednesday press conference. "Borrowers who attended fraudulent schools and have struggled with debt for years or even decades cannot afford to wait any longer."

The lawmakers urged Biden during their press conference to cancel the loans of borrowers who applied for borrower defense in the next 50 days. In their letter, they added that the relief should include the thousands of borrowers already approved for relief who are still waiting for their balances to be wiped out. The lawmakers also wrote that the department should use its authority to enact group discharges for borrowers who attended schools "with documented histories of predatory practices," along with processing any remaining applications.

Democratic Rep. Bobby Scott also urged the Education Department in late November to approve student-debt relief applications not just for borrower defense but for Public Service Loan Forgiveness. During his first term, Trump proposed eliminating the program, which cancels any remaining debt for public sector workers after 10 years of qualifying payments.

An Education Department spokesperson told Business Insider that the department "remains committed to getting borrowers whose colleges took advantage of them all the relief they are entitled without further action on their part."

The spokesperson said that the department paused payments for borrowers with approved discharges and recommended that borrowers with questions on the status of their applications call the borrower defense hotline at 1-855-279-6207.

Biden's Education Department has canceled student debt for nearly 5 million borrowers over the past years, including $28.7 billion for over 1.6 million borrowers who were defrauded by their schools. However, thousands of borrowers are still waiting for their borrower defense applications to be processed, and time is running out.

Durbin said on the Senate floor on Monday that it's "critical" Biden discharge those borrowers' loans "as quickly as possible" because, under Trump's first term, his Education Department ran up a backlog of borrower defense claims, leaving impacted borrowers waiting years for relief.

"History shows that a second Trump Administration is likely to do everything in its power to prevent these students from receiving relief again," Durbin said on Monday. "But our nation's students, who are simply trying to better their lives deserve better."

Trump has not yet provided details on how he will approach student-loan forgiveness. However, some higher education experts previously told Business Insider that relief would likely not be his priority. Preston Cooper, a senior fellow at the conservative-leaning American Enterprise Institute, said that Trump would likely "take a bit more of a skeptical attitude" with borrower defense applications because the Education Department can determine if a borrower qualifies.

"If it's a loan cancellation program that leaves a lot more discretion up to the Department of Education, we could certainly see some major swings in policy," Cooper said.

Timothy Danikowski was ready to start his adult life. After four years in a small college town and a fifth year back at home thanks to the pandemic, he finally moved to Seattle in 2021. Soon after, Danikowski landed a respectable accounting job, moved into his own apartment, and signed up for his first credit card, which he intended to use only for emergencies.

At first Danikowski kept on top of his balance well enough, but soon his compulsive shopping addiction and desire to see the world broke his discipline. "I built up points to travel," he told me. "But when I travel, I want to go shopping, and that's where the spending gets out of control."

In three years, Danikowski has racked up about $15,000 in debt across three cards, one of which has an interest rate of 28%. He makes his minimum payments each month — a task that has become much harder since he lost his job this year — and tries to resist the urge to keep using the cards, but his balance doesn't budge.

"When it comes to everyday things, I choose comfort over everything else," he said.

Danikowski and many other Gen Zers are rapidly building up credit-card debt. A TransUnion study found that, adjusting for inflation, the average credit-card balance for someone who was 22 to 24 at the end of last year was $2,834, a 26% increase from the average figure for millennials who were the same age a decade ago. The study also suggested that Gen Zers were much more comfortable with credit cards than prior generations were: They were opening more cards, were more likely to fall behind on payments, and were using the cards for more types of purchases. Alev told me Credit Karma data shows Gen Zers are acquiring debt at a faster rate than any other age group. The combination of an increasingly turbulent economy and Gen Zers' desire to make up for lost time via pandemic "revenge spending" has left many members of the generation overly reliant on credit.

"Gen Z really prioritizes fun over finances when it comes to things like eating out, shopping, and travel," says Courtney Alev, a consumer advocate at Credit Karma. "That combined with the fact that they have just had fewer earning years explains why their credit-card debt is growing at a faster rate."

While Gen Zers' overall debt levels are still lower than older generations', young consumers' early reliance on credit cards puts their financial futures at risk. "The financial burdens that Gen Z is facing today can really have long-lasting effects on their lives," Alev says, "including their ability to achieve key milestones, such as delaying big moments like marriage, buying a home, or starting families until they feel more financially secure."

Part of Gen Zers' interest in credit cards is simply the march of technological progress. The digital natives have more payment options than any generation before them, and they've embraced electronic payments and alternative credit methods like digital wallets and buy-now-pay-later apps. Meanwhile, credit-card companies have targeted young people as eager new customers.

There are also some acute financial reasons Gen Zers have been jumping headfirst into the credit pool. Pandemic restrictions, inflation, and high interest rates hit them hard as they were starting their professional careers and getting their financial footing. As young people sought solutions to financial stresses, and as credit-card balances fell, credit-card companies were more than willing to make Gen Zers an offer. The companies made getting credit easier in 2021 and 2022 by allowing people with lower credit scores to access cards for which they previously would have been ineligible. Young people opened credit cards at a faster rate than any other age group during the pandemic.

The temptation to use those cards was strong. Credit Karma found that its Gen Z members' average credit-card debt increased by 3.2% from the first quarter to the second quarter of 2024, while the average debt for millennials, Gen Xers, and baby boomers increased by 2.4%, 2%, and 1.6%. While credit-card balances in the US decreased early in the pandemic, it didn't take long for American consumers to start racking up debt again. Credit-card balances have risen by $396 billion since the first quarter of 2021, a 51% increase.

Some people accumulated credit-card debt in a wave of post-pandemic revenge spending; some were chasing points and rewards. Still others said they racked up big bills because they couldn't afford not to. Regardless of the reasons, it's clear that many Gen Zers are comfortable with their little pieces of plastic.

Danikowski, for example, told me he fell into the credit-card trap after acquiring an American Express gold travel card with a sky-high annual percentage rate. The card let him build up points, which allowed him to continue traveling. "I got so used to this lifestyle I lived for the last three years that it became hard for me to cut back," he says.

Others, like Nico, a 27-year-old advertising strategist, got caught in a post-pandemic spending cycle. After graduating from college in 2020, Nico moved back home with his mom to save money while working remotely. By late 2021, Nico was ready for a change. After he moved to Chicago, he started using his credit card way more. He was struggling to make his $1,100 rent on a $36,000 salary. In addition to paying his bills and making sure he had groceries, Nico was trying to make new friends in the city.

"I couldn't afford to live, but I'm in a new city, and I want to go out and meet people. I called those my fun expenses," he says. "I started putting all of that on my credit card."

Nico kept reaching his credit limit, and the credit-card company kept extending it. Three years later, he has about $20,000 in credit-card debt and a monthly minimum payment of $400, nearly all of which goes toward interest. Landing a higher-paying job has helped him start to get a handle on the debt, he said. He's stopped using the card and tries to make a payment of $700 to $900 each month in hopes of bringing his total down.

Credit proved vital for Emmaline, a 27-year-old web developer in North Carolina, when she had to make ends meet during a career pivot. She racked up $6,000 in credit-card debt while attending a full-time coding boot camp, using the card to to pay for groceries, car maintenance and insurance, and other life expenses. While the card was a lifeline as she tried to set herself up for a successful career, she felt ashamed and worried about her debt, she tells me. For a long time she kept it a secret. This year she finally opened up to family members, who helped her make a plan to pay it down and offered some financial assistance. After spending a few months throwing nearly every penny she had at the debt, Emmaline was able to pay it all off in November.

"I made sure I was only eating beans and leaving myself money for gas," she says. "I let out a tear or two of pure joy and relief when it was finally paid off."

Gen Zers are far from alone in racking up credit-card debt: The total credit-card balance held by US consumers surpassed $1 trillion in 2023. The number of Americans struggling to pay off their loans is also rising. But the particular danger for Gen Zers is becoming so reliant on credit cards so early in their financial lives. Higher debt, Alev says, can lead to lower credit scores that could make it more difficult to pay for things like a house or a car. From March 2022 to February 2024, the percentage of Credit Karma's Gen Z members with subprime credit, meaning a score below 600, rose by 8 points, to 33% from 25%, while the percentage of millennials with subprime credit scores increased by 6 points. Credit Karma said the average Gen Z credit score dropped to 659 in the second quarter from 671 in the first quarter.

William, a 27-year-old emergency medical technician in Colorado, has about $20,000 in credit-card debt, accumulated over 4 ½ years. His first job out of college in 2020 came with a salary of $27,000. Struggling to get by, William primarily used his credit card for necessities like groceries, bills, and car maintenance. But when a health emergency kept him out of work for weeks, his balance snowballed. These days, William makes his minimum payment, but nearly all of it goes to interest. He says he once dreamed of moving abroad and teaching English but has accepted that his credit-card debt keeps him tethered to a reliable source of income stateside.

"I'd like to have a family one day and be able to settle down and raise kids, give them a good life," William says. "But that's not something I can do until I have a better hold on this."

It's not clear that Gen Zers' habits will change anytime soon. The Federal Reserve Bank of New York said in August that younger debt-holders were more likely to be delinquent on their credit-card payments than older ones. Falling behind on these payments has given young people a bleak outlook.

"Credit-card debt is an invisible problem," Emmaline says. "You can't see it. It veils you in shame. It eats you like a parasite."

Alev says there are some steps people can take to try to escape credit debt. First and foremost, she cautions people to stay as far away from high-interest debt as possible. She also advises debt-holders to stop using that credit line and make a plan to pay down the debt, such as transferring the debt to a personal loan at a lower interest rate.

Most important, she says, members of the credit-card generation shouldn't bury their heads in the sand. She recommends people create a spreadsheet listing all their debts along with minimum payments, interest rates, and consolidation options.

When William feels suffocated by his monthly payments and interest rate, he can feel tempted to rack up even more debt. "Someone is always willing to give you another credit card," he says.

Danikowski, meanwhile, said feeling hopeless about his debt was pointless. Though he lost his job this year, he still took trips to Europe and New York.

"I know it's not a good decision," he says. "But at least I've gotten to see the world."

Erin Snodgrass is a senior reporter at Business Insider.

• President-elect Donald Trump is unlikely to continue many of Biden's student-debt relief efforts.
• Borrowers are still waiting for a final court decision on the SAVE student-loan repayment plan.
• Even if the plan survives the courts, Trump and GOP lawmakers could take steps to rein in relief.

During his two terms as president, Joe Biden has used various programs to cancel $175 billion in student debt for nearly 5 million borrowers. Those efforts will likely fizzle out over the next four years.

Two of Biden's key debt-relief initiatives are tied up in court: his SAVE income-driven repayment plan, intended to make student-loan payments cheaper for borrowers, and his broader loan forgiveness plan, set to benefit over 30 million borrowers.

Millions of federal borrowers remain in limbo as they wait for court decisions, and even if the plans do survive the courts, President-elect Donald Trump is unlikely to prioritize either the broad or the incremental relief efforts that Biden planned to implement.

"The Biden administration has taken a stance of, 'We want to try and forgive as much debt as possible through various different programs,'" Preston Cooper, a senior fellow at the conservative-leaning American Enterprise Institute, told Business Insider. "And to put it mildly, we're not going to see that same attitude under the Trump administration."

Trump has offered minimal detail on his student loan plans once he takes office. However, he has criticized broad student-loan forgiveness and ran up backlogs processing student-debt cancellation applications for key programs during his first term. Some higher education experts said borrowers can expect targeted relief and cheaper payments through SAVE to cease under Trump, and GOP control over Congress and the White House could enable that to happen quicker.

Jared Bass, the senior vice president for education at the left-leaning Center for American Progress, told BI that Trump's administration "will not be as kind to student-loan borrowers."

"I think it'll be rolling back a lot of the progress that we saw for borrowers and borrower protections," Bass said.

While Trump's team did not comment on future plans for debt relief, Trump called Biden's student-loan forgiveness "vile" during a June campaign rally and said that the relief "is not even legal."

The fate of cheaper payments under Biden's SAVE plan

Biden's SAVE plan lowered monthly payments for many borrowers based on their income and set them on a quicker path to relief. It has been blocked since July, following legal challenges from a group of GOP-led states.

8 million enrolled borrowers have been on an interest-free forbearance as they wait for a final court decision, and Cooper said that even if SAVE does prevail in federal court, Trump could work to eliminate the plan.

"It looks probably more likely than not to be struck down in courts, but even if it's not, it's likely that the Trump administration would move to try and reverse that through regulation," Cooper said.

Borrowers would likely lose the lower monthly payments they were receiving under SAVE if Trump eliminates the program, Bass said.

To get rid of SAVE, Trump's administration would have to undergo the negotiated rulemaking process, which takes time and would not happen immediately, and borrowers would likely be put back on other existing income-driven repayment plans. With Republicans holding a majority over the House and Senate, it's possible that lawmakers would also introduce legislation to rein in loan cancellation plans like SAVE.

That could include the College Cost Reduction Act, introduced by GOP Rep. Virginia Foxx in January. This bill would constrain the Education Department's ability to create new repayment plans by narrowing repayment options to a 10-year "mortgage-style" plan and an income-driven repayment plan.

"Student-loan debt is skyrocketing, and completion rates are plummeting. There's bipartisan agreement that lasting reforms are needed to correct course," Foxx previously told BI.

Uncertainty around public service loan forgiveness and relief for defrauded borrowers

Two other of Biden's major relief efforts have been improvements to Public Service Loan Forgiveness, or PSLF, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments, and borrower defense, which forgives debt for borrowers who were defrauded by the schools they attended.

Trump proposed eliminating PSLF during his first term but doing so would require congressional approval, and there has not yet been sufficient support among lawmakers to get rid of the program. However, Cooper said it's possible that Trump's administration could "take a bit more of a skeptical attitude" with borrower defense applications because the Education Department determines if a borrower faced fraud and meets the qualifications for relief.

"I think that if a loan cancellation program is set out clearly in law, the administration will have to implement that faithfully," Cooper said. "If it's a loan cancellation program that leaves a lot more discretion up to the Department of Education, we could certainly see some major swings in policy."

Rep. Bobby Scott, the top Democrat on the House education committee, urged Biden's Education Department in a November letter to follow through on its loan discharges for borrowers deemed eligible for relief before Trump takes office.

"As the Administration winds down its work, I am deeply concerned about the future and whether much of this progress will be undone, ultimately harming student borrowers, particularly those who have already been promised debt relief through Borrower Defense and through Public Service Loan Forgiveness," Scott wrote.

Trump could also choose not to carry out Biden's broader relief plans, including one that aims to provide relief to categories of borrowers, including those whose balances have grown due to unpaid interest, along with a separate proposal to provide relief to borrowers experiencing financial hardship.

• The College Board found that student-loan borrowing is decreasing while grant aid is increasing.
• It comes as colleges are facing enrollment declines and questions over the value of a degree.
• Education experts told BI these shifts could force colleges to change the way they charge students.

You may not have noticed that the cost of college is quietly going down.

That's because sticker prices at public colleges haven't kept up with inflation, and schools are offering more grant aid, bringing the average real cost down. Student loan borrowing has also decreased, showing how new students are less reliant on loans.

"It's really something that's never happened before, so that's pretty remarkable," Jennifer Ma, a researcher at The College Board, which reported these findings, told Business Insider.

Still, steep college costs remain a barrier for many seeking a higher education. Students are increasingly sensitive to taking out loans, and with many questioning the value of higher education, it's forcing colleges to consider whether they can still afford to raise tuition, even with a looming enrollment cliff and volatile state funding. It could shift the way tuition prices are set in years to come.

"For colleges, I think they're really up against those tough public perceptions right now of cost is up, and value is down," Michelle Dimino, the director of the centrist think-tank Third Way Education, told BI. "And so they're going to still be in a bind for a while figuring out, 'How do we mitigate that?'"

Student loan aversion and enrollment declines

Over 40 million Americans have student debt, and while President Joe Biden has taken steps to improve some programs to make the loans easier to pay off, high interest rates can leave many struggling to pay off their balances for decades. This is a big reason many younger Americans are leaning toward financing options that do not include student loans, like grants, or forgoing college altogether.

A 22-year-old previously told BI that avoiding debt was a key factor in her decision to skip college.

"I have no student loans, like so many of my friends are in $100,000 in debt and student loans just to get a job that pays $60,000 a year," she said.

The reluctance to accumulate debt could factor into the College Board's finding that student-loan borrowing has decreased.

"Students are feeling more nervous and more skeptical about taking out loans to go to college," Dimino said, adding that as a result, colleges should be prepared to respond to students' price sensitives, especially with looming enrollment challenges.

The enrollment cliff is something colleges cannot control. The number of high school graduates is expected to decline in the coming years because of birth rate declines, meaning fewer students could seek to enroll in a postsecondary institution. Data from the Western Interstate Commission for Higher Education found that the number of high school graduates should peak in 2025 at 3.9 million, with a projected decline to 3.5 million by 2037.

Kimberly Dancy, associate director of research and policy at the Institute for Higher Education Policy, told BI that the declines in student borrowing could already be a sign of lower enrollment. She added that the students who are enrolling today might have less financial need than "students who were enrolling 10 to 15 years ago might've seen" due to the availability of aid like grants and scholarships.

Specifically, per the College Board, the maximum Pell Grant award for low-income students increased to $7,395 in 2023-24 from $6,895 in 2022-23 before adjusting for inflation due to a spending bill Biden signed into law. On top of that, institutional grants — or grants provided by colleges — to undergraduates increased by 30% between 2013-14 and 2023-24. Additionally, institutional grant aid for all students rose by $19.6 billion over the same timeframe, accounting for 52% of all grant aid in the 2023-24 school year.

With federal aid being volatile, institutions focusing more on grant aid could be a sign that colleges are responding to affordability concerns and contributing to net college price declines.

"Institutions will really have to grapple with if they do see a decline in state appropriations, maybe they can't raise tuition in the way they did in the past," Dimino said.

What's at stake for colleges

Over the course of the pandemic, colleges got government funds to help keep them afloat. Those funds have now run out, meaning colleges are subject to the volatility of the state budget funding cycle — and higher education is usually on the funding chopping block.

Jennifer Delaney, a professor in the School of Education at Berkeley, told BI that a main factor as to why higher education often doesn't get the funding it needs is because "institutions have figured out that students and families are more reliable at paying their bills than the state is." However, that type of thinking can make it difficult for colleges to best serve their students when they do not have reliable funding.

"The mission for colleges is advancing the human condition and advancing knowledge, and these are very long timeframe missions and goals, yet they're working within either annual or biannual budgeting cycles," Delaney said.

The conversation on the value of higher education could also be weighing on state's decisions to boost funding for colleges, leading some officials to think that "maybe it's not as worthwhile to invest in the sector," Delaney added.

Since state funding shifts, there are steps colleges can take to make higher education more affordable for its students. Dancy said the availability of institutional aid is a good first step, "using grants in ways that help them both attract students, to encourage them to enroll in their institutions and also as a tool for retention and to support degree completion for those students over the course of their education," she said.

To be sure, Dancy said that even with the increases in grant aid, there is still the issue of unmet need, which she defined as "a really substantial gap between what many students can afford and what they are asked to pay to enroll in higher education."

That's where the federal government can play a role. The left-leaning think tank Center for American Progress released recommendations for the government to boost college affordability, including strengthening the Pell Grant, implementing proposals to make college free for two years, and fully funding community colleges.

However, it's unclear where federal investment for higher education will sit under President-elect Donald Trump, placing the focus on colleges to consider ways to make a four-year degree affordable.

"Earning a college credential is still a worthwhile investment for many students," Dancy said. "And so addressing affordability concerns on the front end is a really critical way to ensure that that opportunity is available to more students."