Student Debt 2025: What Biden Tried, What Trump Changed, and a Better Way Forward
Biden leaned on IDR, Trump narrowed it with RAP, and borrowers are still stuck. Here’s how to fix it.
Introduction
America moved from Biden to Trump and student debt remains a pressing problem for many American households. Democrats have leaned heavily on income-driven repayment (IDR). Trump’s July 2025 tax bill narrowed IDR into a single new program, while also reshaping conventional loans and borrowing limits. Both paths leave borrowers with uncertainty and the system with unsustainable costs.
This article reviews the Biden approach, the Trump reforms, and an alternative centrist plan — one that balances affordability, predictability, and taxpayer responsibility.
Democratic Approach: Biden’s Use of IDR and the SAVE Program
The Biden Administration centered its student debt agenda on Income-Driven Repayment (IDR) programs, particularly the SAVE plan. SAVE was designed to increase affordability by:
Raising protected income from 150% to 225% of the federal poverty line.
Cutting required payments from 10% to 5% of discretionary income (starting 2024).
Eliminating unpaid interest when monthly payments are below interest owed.
Allowing discharges after 10 years for balances under $12,000, with longer timelines for larger loans.
Permitting married borrowers filing separately to exclude spousal income.
Strengths of the Biden Approach
Expanded eligibility and lower payments improve affordability for new graduates.
No negative amortization — balances no longer balloon simply because payments don’t cover interest.
Shorter forgiveness horizon (10 years for small loans) provides earlier relief for some borrowers.
Weaknesses of the Biden Approach
Discharges remain politically fragile — the tax exemption for forgiven balances sunsets in 2025, exposing borrowers to unexpected tax bills.
Outcomes are unpredictable: changes in income, marriage, or divorce can drastically alter payments.
Heavy reliance on IDR may encourage borrowers to assume higher debt loads, betting on eventual forgiveness.
Progressive voices (Sanders, Warren) pushed Biden toward ambitious, broad forgiveness efforts that courts struck down. As a result, time was lost on unworkable plans instead of more modest, durable reforms.
Republican Approach: The RAP Plan and Broader Loan System Changes
Republican reforms in the 2025 tax bill reshaped both repayment structures and borrowing rules. At the center is the new Repayment Assistance Plan (RAP), which becomes the only IDR option for new borrowers. The law also changes conventional loans and overall borrowing limits.
Key Features of RAP
Minimum payment: $10/month for all borrowers.
Tiered payments: 1%–10% of AGI depending on income, applied to the entire AGI once a threshold is crossed (creating sharp “cliffs”).
Dependent allowance: $50/month deduction per dependent, subject to $10 minimum.
No negative amortization: Unpaid interest is waived, and balances must decline at least $50/month when payments fall short.
Forgiveness horizon: 30 years of payments required (10 years under PSLF still available).
Broader System-Wide Changes (Beyond RAP)
Borrowing caps: New aggregate limits on undergraduate, graduate, and parent borrowing.
Restrictions on PLUS loans: Grad PLUS eliminated for new borrowers; tighter rules for Parent PLUS.
Shift to private credit: With caps and limits, more students — especially graduate and professional students will rely on private loans at higher interest rates.
Stricter deferments/forbearances: Many eliminated, with faster resumption of collections.
Reduced borrower defenses: Harder to seek relief if schools close or commit fraud.
Strengths of the Republican Approach
RAP prevents negative amortization, fixing a long-standing flaw in some IBR programs.
$10 minimum payment may simplify recordkeeping, reducing “lost” months of eligibility.
Borrowing caps may restrain tuition inflation by curbing access to unlimited federal credit.
Weaknesses of the Republican Approach
30-year horizon delays relief far longer than prior IDR programs, increasing the number of student borrowers who will take student debt into retirement and impeding saving for other household needs.
Payment cliffs from the tiered AGI design create arbitrary jumps in monthly bills.
Borrowing limits shift graduate students toward private loans, raising long-term costs and risks.
Doctors and professionals face especially steep burdens, with effects on healthcare supply and costs.
RAP encourages contributions to conventional 401(k)s and HSAs over Roth accounts. This change may increase overall borrowing costs and lead to a suboptimal retirement strategy.
Shared Weakness of All IDR Approaches
Biden’s SAVE, older IBR programs, and Trump’s RAP share common flaws:
New graduates with modest incomes have little choice but to enroll.
Eventual financial outcomes are uncertain and dependent on marital status, income changes, and political decisions.
Many borrowers pay more over a lifetime than they would under a conventional loan.
Loan forgiveness relies on fragile political and tax provisions.
A better path is to make conventional loans more reasonable for borrowers starting their careers reducing the need to push all borrowers into complex, uncertain IDR structures.
A Centrist Alternative
A centrist reform would combine affordability up front with predictability over time while limiting taxpayer exposure.
Key Features
Zero interest for first 3 years of repayment on both the IDR option and the conventional option, easing burdens when salaries are lowest.
Partial loan discharges after 60 payments, to provide earlier, reliable relief and to motivate quicker loan repayment, an outcome which could favor both taxpayers and borrowers.
End all interest charges after 20 years (rather than 30), ensuring balances do not persist for life and facilitating increased household savings for emergencies and retirement.
IRS-managed collections after 20 years, improving efficiency and compliance.
Eliminate the tax deductibility of student loan interest, using savings to pay for upfront concessions.
Compromise on taxation of discharges: centrist reform would codify that discharges are partly taxable, but at reduced/limited rates, balancing fairness with revenue.
Strengths of the Centrist Approach
More predictable: relief occurs after specific payment milestones, not subject to administrative discretion.
Fairer incentives: students who borrow more still repay more, avoiding the moral hazard of “borrow now, forgive later.”
Durable across administrations: embedding relief in loan contracts makes it less vulnerable to political reversal.
Earlier relief (60 payments, 20 years) prevents debt from dominating retirement planning.
Conclusion
The Biden era leaned on IDR expansion but left borrowers in a maze of uncertain outcomes. Trump’s RAP plan simplified repayment but stretched it to 30 years while capping borrowing, pushing many toward private loans. Both paths have flaws: one encourages overborrowing with the hope of forgiveness, the other risks lifelong payments with little chance of relief.
A centrist plan — ending interest after 20 years, embedding earlier partial discharges, and aligning repayment with realistic household finances — offers a more durable way forward. It protects taxpayers, provides predictability for borrowers, and avoids the extremes of blanket forgiveness or endless repayment.
America’s student debt problem won’t be solved by ideology. It requires balance, pragmatism, and reforms that work for students, households, and the economy.