The pendulum of U.S. student loan policy has swung dramatically in just a few years. Under President Biden, the focus was on broad forgiveness, expanded repayment relief, and measures designed to ease the long-term burden for millions of borrowers. Today, under the Trump administration, the emphasis has shifted toward repayment enforcement, extended timelines, and tighter borrowing limits. The stated goal: restore fiscal discipline, reinforce personal accountability, and ensure the loan system operates within clear legal boundaries. This sharp contrast highlights the debate around student loan repayment under Trump and how it compares to Biden’s more expansive approach.

For high-net-worth families—particularly those funding education for children or grandchildren—these changes have direct financial planning implications. With the era of expansive federal forgiveness programs effectively over, proactive education funding, integrated with tax optimization strategies and long-term wealth planning, has become essential. The rules have changed, and so must the strategies to protect both your family’s educational goals and your broader financial legacy.

1. Biden’s Approach: Forgiveness-Focused Relief

In 2022, the Biden administration made student debt relief a central plank of its higher-education agenda. The plan aimed to cancel up to $10,000 in federal student loans per borrower—or $20,000 for Pell Grant recipients—targeting relief to millions of Americans burdened by education debt. Alongside this, the Department of Education expanded the Public Service Loan Forgiveness (PSLF) program, simplifying eligibility rules and retroactively counting more payments toward forgiveness. This change dramatically increased access: more than a million borrowers received forgiveness through PSLF during Biden’s tenure, a stark contrast to the few thousand approvals prior to 2021.

Biden also introduced the SAVE plan, a new income-driven repayment option capping undergraduate loan payments at 5% of discretionary income and subsidizing unpaid interest to prevent balances from growing. However, the administration’s flagship cancellation plan faced immediate legal challenges, culminating in a 2023 Supreme Court ruling that struck it down for exceeding executive authority. Without congressional approval, broad forgiveness was off the table, forcing the administration to pursue narrower relief avenues. By the end of 2024, the momentum behind large-scale cancellation had slowed considerably, leaving many borrowers—and their families—without the sweeping relief they had anticipated.

2. Trump’s Course Correction: Philosophy and Stated Rationale

When President Donald Trump returned to office in January 2025, his administration moved quickly to reverse course on federal student loan policy. Officials characterized Biden’s forgiveness initiatives as unlawful “unfair bailouts” that shifted costs from borrowers to taxpayers, citing repeated court rulings against broad cancellation. In their view, forgiving debt without legislative approval undermined the rule of law and rewarded a select group—often higher-income graduates—at the expense of those who had repaid their loans or never attended college.

The guiding philosophy of student loan repayment under Trump centers on fiscal sustainability, personal responsibility, and legal compliance. Trump’s education officials emphasized “strengthening the student loan portfolio” by restoring interest accrual, resuming aggressive collections on defaulted loans, and ensuring borrowers fulfill their repayment obligations. They framed these measures as necessary to protect taxpayer dollars, maintain the solvency of the federal loan system, and discourage overreliance on government forgiveness. In their words, federal loans should be repaid “whenever possible,” with targeted relief reserved for borrowers who meet strict, legislated criteria rather than through executive action.

3. Key Policy Changes Under the One Big Beautiful Bill Act (OBBBA)

The OBBBA, enacted in 2025, formalized many of the Trump administration’s student loan reforms, reshaping repayment and forgiveness rules for both current and future borrowers.

Public Service Loan Forgiveness (PSLF) Restrictions

The administration tightened PSLF eligibility through a March 2025 executive order. The Department of Education can now disqualify employers found to have a “substantial illegal purpose,” effectively excluding certain nonprofit or public organizations from the program. Activities cited include aiding illegal immigration, engaging in prohibited medical practices, or supporting organizations deemed harmful to national security. At the same time, processing of PSLF applications has slowed, creating uncertainty for borrowers who believed they were close to meeting forgiveness requirements. For families counting on PSLF as part of a long-term repayment strategy, this change heightens the risk that promised relief may never materialize.

 Income-Driven Repayment Overhaul

OBBBA replaced the patchwork of income-driven repayment plans with a single option—the Repayment Assistance Plan (RAP)—and a standard 10-year fixed plan. RAP maintains payments tied to income but extends the forgiveness timeline to 30 years, compared to the previous 20–25 year terms. Existing plans like SAVE, PAYE, and IBR are being phased out, and all borrowers will be transitioned into RAP by 2028. The administration frames this as streamlining, but the longer repayment horizon significantly reduces the program’s generosity.

c) Graduate Loan Limits and End of Grad PLUS

Graduate and professional students now face federal borrowing caps of $100,000 (or $200,000 for medicine and law), replacing the unlimited borrowing previously available under Grad PLUS. Officials argue the change will curb tuition inflation and prevent excessive debt loads in programs with poor job prospects. For families, especially those with children pursuing advanced degrees, this shift may necessitate greater reliance on private loans or personal funding.

d) End of Pandemic-Era Interest Waivers and Collections Pause

As of August 1, 2025, interest began accruing again for borrowers in the SAVE plan, in compliance with a court ruling. The Department of Education also reinstated aggressive collection measures, including wage garnishment and tax refund offsets, for borrowers in default. These actions signal a firm return to pre-pandemic enforcement norms.

e) Taxation of Forgiven Debt After 2025

The OBBBA allowed the pandemic-era provision making forgiven student debt tax-free at the federal level to expire. Beginning in 2026, most forgiven loan balances will again be treated as taxable income, creating potential “tax bomb” liabilities for borrowers receiving long-term forgiveness under income-driven repayment.

4. Practical Implications for High-Net-Worth Families

For affluent families, the Trump administration’s changes to student loan policy mark a shift from relying on federal forgiveness programs toward greater financial self-reliance in education funding. The strategies you adopt today can significantly influence both your children’s financial futures and the long-term preservation of family wealth.

Shift from Forgiveness to Self-Funding

With extended repayment timelines and stricter forgiveness rules, it is prudent to focus on tax-advantaged investments such as 529 plans, education trusts, and diversified investment accounts. These vehicles not only help cover future tuition costs but can also be integrated into broader tax planning wealth management strategies, reducing reliance on uncertain government programs.

Review of Education Funding Strategies

Graduate and professional degrees often require substantial resources. With federal loan caps now in place, anticipate higher out-of-pocket contributions. A family office–style planning approach can ensure these costs are addressed within your overall wealth plan, protecting other portfolio priorities.

Tax Planning for Future Forgiveness

From 2026 onward, most forgiven student debt will be treated as taxable income at the federal level. This “tax bomb” may also trigger state-level liabilities. Coordinating with an investment tax advisor can help you anticipate and offset these costs through tax mitigation strategies such as capital gains tax planning or charitable contributions.

Employer Benefits

Families who own or operate businesses can explore providing up to $5,250 annually in tax-free student loan repayment contributions for employees, a benefit preserved under current law. Structuring this within your compensation packages can be a powerful retention and tax smart investing tool.

Private Loan Considerations

With greater reliance on private financing for graduate programs, it’s essential to understand the differences in interest rates, repayment flexibility, and borrower protections compared to federal loans. In some cases, integrating private lending costs into a tax efficient investment strategy may allow you to manage the expense more strategically.

5. Strategic Takeaways

The current student loan environment is built around repayment enforcement, not broad cancellation. For high-net-worth families, this means:

• Treat Federal Loans as a Backstop: Use them only as part of a broader, tax aware investing and funding strategy, not as a primary solution.
• Integrate Education Costs into Legacy Planning: Align education funding with tax efficient estate planning and legacy planning to ensure intergenerational wealth goals remain intact.
• Leverage Tax Optimization Strategies: Consider tax deferral strategies, charitable tax planning, and tax efficient portfolio construction to offset education-related costs.
• Monitor Policy Changes: Future administrations could alter the repayment-forgiveness balance again. Regular reviews with a high-net-worth advisor or a family office team can help you stay ahead of shifting rules.

Conclusion

Student loan repayment under Trump signals a decisive shift away from large-scale loan forgiveness toward a framework built on repayment discipline, narrower relief, and stricter eligibility. For affluent families, this change reinforces the value of proactive, tax-aware education funding. Relying on evolving political promises is no longer a prudent strategy—integrating education costs into a broader plan for tax efficient wealth management, legacy planning, and intergenerational support is essential. While targeted programs like PSLF remain, they are more restrictive and slower to deliver benefits, making self-reliance the safer, more predictable approach.

Navigating today’s changing student loan environment requires more than smart saving—it demands sophisticated planning. At Tiempo Capital, we help high-net-worth families and business owners integrate education costs into holistic wealth strategies using tax optimization strategies, tax efficient investing, and legacy-focused planning. Learn more about the clients we serve and contact us today to secure your family’s educational goals with confidence

This material is for informational purposes only and does not constitute financial, legal, tax, or investment advice. All opinions, analyses, or strategies discussed are general in nature and may not be appropriate for all individuals or situations. Readers are encouraged to consult their own advisors regarding their specific circumstances. Investments involve risk, including the potential loss of principal, and past performance is not indicative of future results.

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Sources

Kelley R. Taylor (July 2025), Kiplinger, “Trump Targets Student Loan Forgiveness: Here’s How Taxes and Repayment Could Soon Change”, from [link]

U.S. Department of Education (July 2025) “U.S. Department of Education Continues to Improve Federal Student Loan Repayment Options, Addresses Illegal Biden Administration Actions”, from [link]

U.S. Department of Education (July 2025), “U.S. Department of Education Announces Immediate Implementation of Higher Education Provisions in the One Big Beautiful Bill Act”, from [link]

Liam Knox (June 2025), Inside Higher Ed, “Graduate Programs Face a Federal Reckoning”, from [link]

The White House (March 2025), “Restoring Public Service Loan Forgiveness”, from [link]

Michael Stratford (November 2025), Politico, “Trump team eyes quick rollback of Biden student debt relief”, from [link]