For decades, far-right lawmakers have advocated for policies that could weaken higher education in the United States. These include blocking efforts to allow student borrowers to earn cancellation, enabling predatory actors to exploit students, and even proposing the elimination of the U.S. Department of Education. A new agenda from the Heritage Foundation, called Project 2025, aims to implement policies including a new student loan repayment plan that would increase costs for borrowers.
Project 2025 suggests phasing out existing income-driven repayment (IDR) plans, such as the Biden-Harris administration’s Saving on a Valuable Education (SAVE) plan, and replacing them with a one-size-fits-all IDR plan. The proposed plan offers limited flexibility for borrowers' financial situations and eliminates SAVE’s interest benefit. This change threatens to bring back ballooning balances even for those who make timely payments.
Under Project 2025, monthly payments would rise significantly
If enacted, Project 2025 would eliminate the SAVE plan and replace it with a less affordable option. Borrowers' monthly payments could increase substantially under this new plan. For instance, student borrowers aged 25–34 with median earnings for their educational level would face higher payments. Those who attended college but did not earn a degree or credential might see their monthly payments almost quadruple, while those with associate degrees could see their payments more than triple.
A vast majority of the 8 million borrowers currently enrolled in SAVE would experience increased monthly payments under Project 2025. Additionally, the income threshold at which borrowers must start making payments would be lowered from $34,000 (225 percent of the federal poverty line) under SAVE to $15,000 (the federal poverty line). Consequently, single borrowers earning as little as $15,000 or families of four living on $31,000 would need to begin making monthly student loan payments.
Project 2025 may lead to growing balances
The agenda allows runaway interest on student loans, meaning some balances might grow despite regular payments. Data from 2015-2016 show that twelve years after enrollment, 27 percent of all borrowers owed more than they initially borrowed; this percentage was higher among Black borrowers (52 percent), Pell Grant recipients (33 percent), those near or below the poverty line (31-34 percent), non-degree holders (31 percent), and those with an associate degree or certificate (30 percent).
For example, a typical Black K-12 classroom teacher with graduate debt starting repayment in 2024 could see their balance grow during the first eight years of repayment under Project 2025—even while making regular payments. With an initial debt of about $70,000 and a starting salary around $52,000, this teacher's first-year payment would be $308—insufficient to cover the $325 accruing in interest each month.
Under Project 2025 policies eliminating Public Service Loan Forgiveness and maximum repayment terms on IDR plans, this teacher might pay over a span of 27 years—ultimately paying about $150,000 on an original principal of approximately $70,000 due to rising monthly payments assuming annual wage growth.
Conversely under SAVE
Under SAVE rules applying since August 2023—with nearly 8 million enrollees—the same teacher might have lower monthly obligations: an estimated initial payment of $117 per month with waived additional interest accruals preventing balance growth.
Earned debt relief may be denied
Project 2025 also proposes eliminating time-based and occupation-based forgiveness programs like Teacher Loan Forgiveness ($17K after five years) or Public Service Loan Forgiveness remaining balance cancellation after ten years—potentially trapping many public service workers into lifelong debt cycles by denying earned relief pathways already utilized by many professionals across various sectors including law enforcement officers/nurses/etc.
Millions may lose earned cancellation opportunities if Congress acts upon these changes extending current statutory max timelines up-to-25-years compared against shorter periods offered via current-IDRs benefiting ~12M+ enrollees who otherwise risk losing-out post-max-payment-period-cancellations potentially re-imposing pre-pandemic default rates ranging between ~10%-12% lowering borrower credit scores impacting broader financial health/viability metrics adversely affecting ~1-in-3-IDR-dependent-borrowers aged between ~25-to-49
Methodology used includes SHED/Census data combined across survey periods estimating percentages affected across educational levels reflecting broader population medians relative theoretical impacts illustrating potential cost burdens comparing/contrasting projected impacts juxtaposed against prevailing systems emphasizing need maintaining affordable options mitigating broader socio-economic repercussions stemming potential policy shifts envisioned within "Project" scope targeting significant segments already facing substantial challenges navigating existing structures evolving amidst ongoing discussions shaping future landscape dynamics
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