Trump Targets PSLF, Education Department: What To Do

On March 3, the Senate voted to confirm Linda McMahon as the 13th Secretary of Education, a position that oversees federal student aid programs. The same day, the new secretary set out on what she called a “historic final mission,” inviting all department employees to “perform one final, unforgettable public service to future generations of students,” according to an email posted on the department’s website.

Within one week of her confirmation, President Donald Trump signed an executive order eliminating eligibility for the Public Service Loan Forgiveness (PSLF) program for certain borrowers who previously qualified. He also signaled he would sign an executive order to dissolve the Department of Education.

These events, combined with the recent removal of IDR applications, have left many federal student loan borrowers confused and concerned. But while it seems like changes in student loans have come frequently in the last few months, it may take a long time before anything takes effect — if it does at all.

“It’s important to understand where we are,” says student loan attorney Jay Fleischman. “Nothing has changed definitively. In other words, don’t panic.”

Executive order targets PSLF

On March 7, the president signed an executive order ending PSLF eligibility for employees of certain nonprofit organizations. According to the order, such organizations include those that engage in activities such as violating immigration laws, supporting terrorism and providing gender transition care for minors (which the order describes as “chemical and surgical castration or mutilation of children”).

However, organizations that fall under that definition have not been clearly outlined. The order calls on the Secretary of Education and Secretary of Treasury to determine what falls under the umbrella of “public service” and what doesn’t. Many observers believe this order targets fields of work that contradict the president’s political views, like immigration aid.

“Don’t be fooled, today’s executive order is blatantly illegal and an all-out weaponization of debt intended to silence speech that does not align with President Trump’s MAGA agenda,” warned Mike Pierce, executive director of the Student Borrower Protection Center, in a written response to the order. “It is an attack on working families everywhere and will have a chilling effect on our public service workforce doing the work every day to support our local communities.”

What this means for borrowers

“It’s important for existing borrowers to understand that the Department of Education must still go through a rule-making process [to change PSLF],” says Fleischman. “They are not changing PSLF today.”

Instead, the executive order was more of an order telling the new secretary to take action. And any change that results from that action will take considerable time to implement, according to Fleischman. It’s likely changes won’t take effect until 2027.

Borrowers relying on PSLF should stay informed on official PSLF updates and their own eligibility status. It’s important to keep records of your payment history, communication with your servicer and proof of qualifying employment.

Remember that any payments skipped while in the SAVE plan’s administrative forbearance do not count toward your loan forgiveness. You may want to switch to a qualifying plan — though currently, only the 10-year Standard Repayment Plan is available to new enrollees. You can also consider PSLF buyback program, which allows you to purchase months you were in deferment or forbearance and make them into qualifying payments.

Anticipated executive order threatens Department of Education

For months, Trump has made known his plans to dissolve the Department of Education, and he is expected to sign an executive order to do so in the coming days. However, an executive order is different from legislation. For Trump to dismantle the department, he would need legislation to pass through Congress.

Even without congressional approval, though, Trump’s administration can make major changes. Fleischman uses the recent employee buyout offer as an example. Department employees were offered $25,000 to resign.

“About 10 percent of the [federal student aid] staff took the buyout, so there are ways around congressional approval,” he says. “It’s indicative of what they can do—the primary changes they can make — at an operational level.”

Among its many roles, the department oversees federal student aid, including Pell Grants and federal student loans. If the agency closes, this responsibility may be passed to another department, such as the Treasury, Commerce or Small Business Administration department.

What this means for borrowers

If another government department takes over student loans, experts believe very little will change for borrowers. And whether or not the department remains, you will still need to pay your student loans.

It’s likely the government will continue to offer student loans, though the amount and types of loans available may change. According to Fleischman, there is talk of eliminating the PLUS loan program, which includes parent and graduate loans, but nothing indicates that the government will stop providing the undergraduate federal loans.

Should borrowers still take out federal loans?

With the current chaos and potential loss of certain IDR and forgiveness benefits, many may wonder if it’s still worth it to take out federal student loans. According to Fleischman, federal student loans should still be your first choice if you need to pay for college.

“Private student loans tend to have worse terms — higher interest rates and fewer repayment options — than federal student loans,” he says. While undergraduate federal student loans are 6.53 percent, no matter the borrower, private student loan rates range from around 3.5 percent to 18 percent. Only borrowers with the highest credit scores receiving the lowest rates. Federal loans also have standard, graduated or income-driven repayment programs and terms lasting up to 25 years, while private loans have terms of up to 15 or 20 years.

If you’re thinking of refinancing your student loans, consider these benefits before adding your federal loans into the mix. If you refinance your federal loans, you’ll lose those benefits.