January 1, 1970

Student Loan Forgiveness Proposals Compared: Biden vs. Trump and What's Left

Split image contrasting student loan forgiveness philosophy versus personal accountability approach

Forty-three million Americans owe a combined $1.77 trillion in student loan debt. Over the last four years, the rules governing that debt have been rewritten, blocked by courts, thrown out entirely, and rewritten again. As of spring 2026, 643,000 borrowers are still stuck in administrative limbo waiting on repayment plan access or forgiveness they were already promised, according to a CNBC report citing a court filing. If you're trying to make sense of what's actually available to you, the noise is genuinely overwhelming. This guide cuts through it.

Two Fundamentally Different Philosophies

Before comparing the specific plans, it's worth naming the core disagreement, because it explains almost every policy difference on the table.

Biden's approach was grounded in the idea that the federal government created a predatory lending environment and owes borrowers relief. His administration tried to cancel debt outright, pushed income-driven plans toward near-zero payments, and expanded forgiveness timelines.

Trump's approach treats forgiveness as a fiscal liability and a question of fairness to non-borrowers. The rhetoric shifted to calling Biden's plans "illegal" — and the One Big Beautiful Bill Act of 2025 restructured the entire repayment system around that view. Payments got recalibrated. Forgiveness timelines got pushed out. Borrowing limits got capped.

Neither side is arguing in bad faith. But the borrowers caught in between — people who enrolled in plans that were subsequently dismantled — have paid the price.

Biden's Big Swings: What He Tried and What Got Blocked

Biden's forgiveness agenda was ambitious and largely unsuccessful in its broadest forms.

The HEROES Act one-time cancellation was the headline play: up to $10,000 in forgiveness for most borrowers, $20,000 for Pell Grant recipients. For a borrower with $18,400 in undergraduate debt, that would have cleared the slate entirely. The Supreme Court struck it down 6-3 in Biden v. Nebraska in June 2023, ruling that the HEROES Act didn't give the executive branch authority for a cancellation of that scale.

After that ruling, Biden pivoted to using the Higher Education Act's Section 432(a), which grants the Secretary of Education authority to "compromise, waive, or release" federal loans. That attempt was also blocked by federal courts before it could take effect.

What Biden's team did succeed at:

Approving over $29 billion in targeted forgiveness for specific groups: borrowers defrauded by schools (borrower defense), public servants, and people with permanent disabilities
Expanding PSLF through a waiver that counted previously ineligible payments, clearing the backlog that had plagued the program for years
Creating the SAVE plan, which — before courts struck it down — gave 7.5 million borrowers dramatically lower monthly payments

The Institute for College Access & Success (TICAS) tracked these targeted approvals and noted they represented real relief for specific populations, even as the mass-cancellation agenda collapsed.

The SAVE Plan: A Bold Bet That Didn't Survive

The Saving on a Valuable Education (SAVE) plan launched in 2023 as Biden's third attempt at broad repayment reform. It was genuinely aggressive by historical standards.

Under SAVE, payments were calculated at 5% of discretionary income for undergraduate loans (down from 10% under prior plans). Borrowers earning at or below 225% of the federal poverty line paid $0 per month. The plan also waived all accruing interest as long as borrowers made their required payment — which meant your balance couldn't balloon while you were technically in good standing.

"The SAVE plan was the most generous income-driven repayment plan in the program's history. It was also the one most aggressively challenged in court."

The 8th Circuit Court of Appeals blocked SAVE in 2024, and by December 2025, the Trump administration reached a settlement with Missouri to formally end it. The Department of Education began notifying the 7.5 million enrolled borrowers in March 2026 that they had until July 1, 2026 — and then a 90-day window — to enroll in a new plan.

If you were on SAVE and thought your payments were set, they're not.

What the One Big Beautiful Bill Built

Trump signed the One Big Beautiful Bill Act in July 2025. It's the most significant restructuring of federal student loan repayment since income-driven plans were created. Here's what changed:

The new Repayment Assistance Plan (RAP) is the primary income-based option going forward. Payments range from 1% to 10% of your adjusted gross income, with a $10/month floor if you earn under $10,000 annually. Borrowers get a $50/month reduction per dependent child. Forgiveness kicks in after 360 qualifying payments — that's 30 years.

Compare that directly to what SAVE offered:

Feature	SAVE Plan (ended)	RAP (new)
Payment rate	5–10% of discretionary income	1–10% of AGI
Interest protection	Yes — unpaid interest waived	Yes — unpaid interest waived
Forgiveness timeline	20 years (undergrad) / 25 years (grad)	30 years for all borrowers
Minimum payment	$0 if income below threshold	$10/month
Dependent reduction	None	$50/month per dependent child

The forgiveness timeline is the sharpest edge here. A borrower who enrolled in SAVE expecting 20-year forgiveness now faces 30 years under RAP. That's a decade of additional payments. For someone with $34,000 in undergraduate debt, the difference in total payments over 30 years versus 20 can be substantial — even with interest protections.

New borrowing limits cap how much students can take on going forward:

Graduate students: $20,500/year, $100,000 aggregate
Professional students (medical, law, MBA): $50,000/year, $200,000 aggregate
Parent PLUS loans: $20,000/year per student, $65,000 lifetime per dependent child
Absolute lifetime limit across all borrowing: $257,500

These limits don't affect existing borrowers, but they dramatically reshape the economics of graduate and professional education starting July 1, 2026.

Forgiven debt is now taxable income. Effective January 1, 2026, any amount discharged under an income-driven plan counts as ordinary income — except for PSLF recipients and those affected by school closures or fraud. For a borrower who hits forgiveness after 30 years with $45,000 remaining on their balance, that's potentially $45,000 added to their gross income in a single tax year.

PSLF: The Fight Over Who Counts as "Public Service"

Public Service Loan Forgiveness has always been complicated (128,000 payments processed versus millions of certifications filed tells you something about the gap between expectation and reality). But a new final rule effective July 1, 2026 adds another layer.

The rule redefines qualifying employers by excluding organizations with a "substantial illegal purpose." The listed disqualifiers include supporting terrorism, aiding illegal immigration, and engaging in gender-affirming medical procedures on minors in violation of federal or state law.

The Department of Education estimates fewer than 10 employers per year will be disqualified. Critics, including the American Bar Association and a coalition of 21 state attorneys general, argue the rule uses illegal activity definitions that are politically motivated and could strip eligibility from nonprofit workers mid-career — retroactively wiping out years of qualifying payments once their employer gets flagged.

Litigation is already underway. Borrowers working at organizations in contested legal territory — certain immigration legal aid groups, LGBTQ health clinics, some advocacy organizations — are right to keep watching this.

If you're relying on PSLF, the core requirements remain: 120 qualifying payments while working full-time for an eligible employer. That part didn't change. But what "eligible employer" means is now more contested than it's ever been.

New Borrower Paths: What Each Group Faces Starting July 2026

Your options depend almost entirely on when you took your loans:

If your loans were taken before July 1, 2014: You can stay on the original Income-Based Repayment plan (15% of discretionary income, 25-year forgiveness) or move to RAP.

If your loans were taken between July 1, 2014 and June 30, 2026: You can access the 2014 IBR (10% of discretionary income, 20-year forgiveness) or RAP — but only until July 1, 2028, when your options narrow further.

If you take new loans on or after July 1, 2026: RAP is essentially your only income-based option. No PAYE. No SAVE. No ICR. This single-path design is the Trump administration's stated intent: simplify the system and reduce what it sees as manipulable forgiveness routes.

For Parent PLUS borrowers, the calculus is bleaker. Existing Parent PLUS loans must be consolidated before July 1, 2026 to access any income-based plan. New Parent PLUS loans issued after that date have no income-based options at all.

The Uncomfortable Reality Nobody Wants to Name

Here's where I'll take a position: the way we've handled this has been deeply unfair to borrowers — but not in the way either party usually argues.

Biden's administration encouraged millions of people to enroll in the SAVE plan by March 2024, explicitly telling them their payments and forgiveness timelines were set. Those people made financial decisions — career choices, housing choices, family planning — based on promises that courts and a subsequent administration then dismantled. Over 643,000 borrowers are still in administrative limbo as of April 2026, unable to enroll in any plan or access any forgiveness they were told they'd receive.

The problem isn't that either side had a wrong view about what forgiveness policy should be. The problem is that borrowers were used as policy pawns, invited to rely on a legal framework that was contested from the start.

Whatever the RAP plan's merits, it asks borrowers who were told they'd have 20-year forgiveness to instead spend 30 years repaying. That's not a policy correction. That's a bait and switch.

Bottom Line

The landscape has shifted dramatically and will likely keep shifting. Here's what to actually do:

If you're on SAVE now, you need to act before July 1, 2026. Log into studentaid.gov, review your options, and enroll in a new plan. If you do nothing, you'll be auto-enrolled in the Tiered Standard Plan, which may have higher payments.
If you're aiming for PSLF, verify your employer qualifies under the new July 2026 rule. Keep meticulous records of your qualifying payment count and employment certifications — don't rely on your servicer's records alone.
If you have graduate or Parent PLUS loans, consolidation before July 1, 2026 may be the last window to access income-based repayment options.
If forgiveness is in your future, talk to a tax professional now. Forgiven balances are ordinary income starting in 2026, and planning for that tax bill years in advance beats being blindsided by it.

The single most important insight from all of this: federal student loan policy is not stable. Plans change, courts intervene, and administrations reverse course. Build your financial plan around repayment you can actually control, and treat forgiveness as a potential bonus rather than a foundation.

Frequently Asked Questions

Is student loan forgiveness still happening in 2026?

Targeted forgiveness is still occurring for specific groups: PSLF recipients who complete 120 qualifying payments, borrowers defrauded by their schools through borrower defense claims, and those with permanent disabilities. Broad one-time cancellation is not on the table. RAP offers forgiveness after 30 years, but that's a long horizon and the taxable income rule makes it less clean than it sounds.

What happened to the SAVE plan — can I still use it?

No. The SAVE plan was formally ended through a December 2025 settlement between the Trump administration and the state of Missouri. As of March 2026, the Department of Education began directing the 7.5 million enrolled borrowers to transition to legal repayment options before July 1, 2026. If you're still listed as being in SAVE, you're on a ticking clock.

Does the new RAP plan offer better or worse terms than SAVE?

It's mixed. RAP also waives unpaid monthly interest, which is a significant protection SAVE shared. But RAP pushes forgiveness to 30 years for everyone — versus 20 years for undergraduate borrowers under SAVE. The $50/month-per-dependent reduction helps families. For a single borrower focused on time-to-forgiveness, RAP is strictly worse than what SAVE promised.

Will my student loan forgiveness be taxed?

Yes, in most cases. Starting January 1, 2026, any debt discharged through income-driven repayment plans counts as taxable ordinary income. The exceptions are PSLF recipients, borrowers whose loans are discharged due to school closure, and those who succeed in borrower defense claims. If you're tracking toward RAP forgiveness in 30 years, start planning for that tax bill well before it arrives.

Who is at risk under the new PSLF employer rules?

Workers at nonprofits in legally contested areas face the most uncertainty: immigration legal aid organizations, LGBTQ health clinics, and certain advocacy groups. If your employer is sued or investigated for activities listed in the new rule — aiding undocumented immigrants, gender-affirming care, certain political activities — their PSLF-qualified status could be revoked, and payments you made after the revocation date would stop counting. Keep watching the litigation; multiple federal lawsuits are challenging the rule before it takes full effect on July 1, 2026.

Is it worth pursuing PSLF given all the changes?

For most borrowers in genuine public service careers, yes — the math still works when you're looking at 10 years of tax-free forgiveness versus 20-30 years of full repayment. But the program requires diligence: submit annual Employment Certification Forms, confirm your payment count every year with your servicer, and stay current on the legal challenges to the employer eligibility rules. Passive reliance on the system has burned borrowers before.