How Project 2025 Student Loan Changes Will Impact Your Family
As parents and grandparents, we hope for better educational opportunities for our children and grandchildren. In the current environment, where savings and retirement accounts are being depleted, many of us turn to federal student grant and loan programs to help our young people afford college.
In 2010, student loans were federalized as Federal Student AID (FSA) under the umbrella of the U.S. Department of Education. Project 2025 seeks to eliminate the Department of Education, reverse FSA, and return student loans to private sector operations. Governance would occur through an agency head and board of trustees appointed by the President with the advice and consent of the Senate, and funds would be appropriated by Congress and overseen by professional managers.
The new agency would manage the loan portfolio, handle borrower relations, administer loan applications and disbursements, monitor institutional participation and accountability issues, and issue regulations. Further, it would rescind loan forgiveness programs under the Higher Education Act.
Project 2025 would consolidate all federal loan programs into one new program that will:
- Phase out existing Income-Driven Repayment student loan plans (repayment rate based on the recipient’s current income), and convert them to fixed payment plans, making it extremely difficult for graduates with low income to pay off their loans.
- Terminate interest rate subsidies and the Public Service Loan Forgiveness program, which prioritizes government or public sector work over private sector employment (public service workers, teachers, etc.).
- Include annual and aggregate limits on borrowing.
- Require “skin in the game” from colleges to hold them accountable for loan repayment.
These changes will place an inordinate burden on low-income people seeking higher education. Families with several children in college at the same time will suffer; youth or single parents trying to go to college on their own will struggle. In the end, fewer people will obtain college degrees, leading to fewer people getting higher-paying jobs, leading to more people living in poverty. The effect would likely be a widening gap in income equality.
Take Action
- Students and family members must contact legislators at the state and federal levels to articulate the benefits of student loans and the need for fair repayment schedules. See the Government Information tab on the Engage Tuolumne website for legislators’ contact information.
- Let ENGAGE TUOLUMNE know your personal story about student loans.
- Stay updated by following announcements from the U. S. Department of Education or Federal Student Aid so you know about repayment plan changes, forgiveness options, or temporary relief programs.
- Avoid student loan scams and rely only on official sources like https://studentaid.gov/.
- Join the NAACP Student Debt Campaign that pushes for fairer loan systems.
- Sign petitions.
NOTES
- “The ‘Mandate for Leadership’ Series,” Heritage Foundation, 2025