How the 2024 Presidential Election Could Impact Student Loan Forgiveness

As outstanding federal student loan debt in the U.S. exceeds $1.6 trillion, student loans are a top issue for many voters this election year. So far, President Biden has forgiven $143.6 billion in student debt for 3.96 million borrowers. According to recent polls, 73% of voters believe the government should take some action on student loans.

How does the 2024 Presidential election affect student loans and efforts toward student loan forgiveness? And how will student debt shape the election?

If Kamala Harris Wins the Presidency

If Vice President Kamala Harris wins the presidency, she will likely continue efforts toward student loan forgiveness, building on the policies of the Biden administration. With student loans a top concern for many voters, Harris is likely to make this a part of her campaign strategy. The current Plan B initiative, which is more narrowly focused than prior loan forgiveness efforts, with strict eligibility criteria, may continue under a Harris administration, though its full impact and execution remain to be seen.

If Harris wins the presidency, she will likely push for continued student loan forgiveness. However, her ability to provide student loan relief for borrowers will be impacted by Congressional races and which party controls the two chambers of Congress.

In a Democratic sweep, where Democrats control Congress and the White House, Harris could extend the tax-free treatment of student loan forgiveness without facing opposition. That would allow her to enact hardship forgiveness cancellation policies fully. However, if Democrats control the White House and Republicans control all or part of Congress, any plans put forward by a Harris administration would likely face challenges.

US Senate Races Could Impact Student Loans

Currently, the U.S. The Senate has 51 Democrats (including three independents) and 49 Republicans. With 34 senate races on the ballot this November, this balance of power could quickly shift. Democrats have an uphill battle to keep control of the Senate this year as 23 of the 34 races are for Democratic-held seats, including three in states that voted for former President Donald Trump in 2020. Republicans are defending just 11 seats, all in states Trump previously won.

Republicans can gain control in one of two ways: by winning two more seats or by winning the presidential election along with just one seat. Why does that matter for student loans? With Republicans strongly opposing loan forgiveness, future loan forgiveness efforts could face difficulties. In Fall 2023, a Senate resolution to abolish the SAVE plan failed by just one vote, signaling Republican eagerness to oppose student loan forgiveness.

The Save Plan And Election Outcome

When the American Rescue Plan passed in 2021, it made student loan forgiveness tax-free until December 2025. This means that student loan forgiveness could become taxable again in 2026. If Republicans lose Congress and the White House in 2024, Harris would most likely extend the tax-free forgiveness of student loans without facing Republican opposition, continuing the approach of the Biden administration.

However, if Republicans control one of the two chambers of Congress, they’ll be able to use the expiring tax-free forgiveness provision as a key bargaining chip in their favor. For example, Republicans could agree to keep student loan forgiveness tax-free in exchange for tax cuts.

If Republicans Win The White House

The Republican nominee Donald Trump has been vocal about his opposition to student loan forgiveness. When the Supreme Court struck down Biden’s forgiveness plans in June of 2023, Trump sided with the Supreme Court’s decision. But Trump is not alone in his position. All Republican nominees opposed student loan relief.

If Trump wins the election, what will happen to student loan debt? Republicans have already filed legal challenges to the SAVE plan, and in general, Republicans, including Trump, are against any form of widespread student loan debt cancellation. Should Trump win the presidency, he could issue an executive action overturning SAVE. A Republican presidential winner in 2024 would likely attempt to undo Biden’s student loan forgiveness efforts.

In March 2020, early in the COVID pandemic, Trump used the HEROES Act to extend the student-loan and interest payment pause. But what Trump might do regarding student loan debt if he wins is all speculation at this point as pandemic policies are no longer an accurate reflection of the current economy or political landscape.

Will PSLF Be Impacted?

As of February 2024, the Biden-Harris administration has approved over $56 billion in student loan forgiveness for nearly 800,000 borrowers via Public Service Loan Forgiveness (PSLF). PSLF is an active government program and stands until new laws are passed. But what happens to PSLF under a new President?

In truth, nobody knows exactly but it’s likely Republicans would at a minimum alter PSLF. Could a new administration stop PSLF for existing borrowers? No, the likelihood of retroactively impacting forbearance is low. Trying to retroactively take away or change prior PSLF or waivers would open up the door to massive litigation. It would be much easier for Republicans in Congress or the White House to change PSLF for future borrowers. In an alternative scenario, the Dept. of Ed. could make it more difficult to apply for PSLF under a Republican controlled government. Republicans could also severely limit the funding or completely defund PSLF.

Could Republicans Undo Prior Student Loan Forgiveness? Can student loan forgiveness be reversed?

Republicans have repeatedly demonstrated their intentions surrounding student loan forgiveness. Most recently, in January of this year, House Republicans introduced a bill named the College Cost Reduction Act, which would repeal many of Biden’s core student debt relief programs.

The bill would eliminate all existing federal student loan repayment1 programs – including SAVE. Additionally, under new IDR plans borrowers would not qualify for discharge until and unless they have repaid “the amount of principal and interest owed under the standard 10-year plan.” This effectively means that more borrowers would be in debt for longer than 25 years. The bill’s terms and conditions surrounding other statutory IDR plans, such as ICR or IBR, remain vague and unclear.

The bill also places significant limits on any President’s powers to create new laws around student loan forgiveness. While the College Cost Reduction Act has little chance of becoming law, it provides a notable preview of how Republicans will handle and respond to further student loan forgiveness. If Harris wins the election and Republicans control Congress, they will likely enact efforts to block and prohibit her ability to issue loan forgiveness.

What Does This Mean For You If You Have Student Loans

The upcoming 2024 election cycle stands to bring big changes to the student loan forgiveness landscape– from the potential introduction of ambitious new policies by a Harris administration and the possibility of Republican initiatives aiming to limit forgiveness parameters, the trajectory of student debt relief hangs in the balance.

However, the ultimate impact of the election on student loan forgiveness hinges on the outcomes of elections at both the presidential and congressional levels. To navigate this moving landscape, it is imperative for borrowers to remain informed about loan forgiveness proposals and research their eligibility for existing programs. By staying engaged and proactive, borrowers can better navigate the complexities of student loan forgiveness and make sure to take advantage of any programs they qualify for.

Follow this space for more information and updates.

This blog post provides political predictions and potential forecasting of the 2024 presidential election and does not reflect the views or opinions of Earnest.

This blog post provides personal finance educational information, and it is not intended to provide legal, financial, or tax advice.

¹ As was announced by the U.S. Department of Education (ED), federal student loans have resumed accruing interest starting September 1, 2023, and federal student loan payments were reinstated starting in October. Please note that you may lose benefits associated with your underlying federal loans, such as federal Income-driven Repayment Plans (an example of which is the SAVE plan), Economic Hardship Deferment, Public Service Loan Forgiveness, or other deferment and forbearance options, if you refinance into a private loan. If you file for bankruptcy, you may still be required to pay back this loan. See https://studentaid.gov/ for more information.