How Trump’s Policies Impacted Parent PLUS Loans

The Parent PLUS Loan program has long been a lifeline for families striving to finance their children’s higher education. However, during Donald Trump’s presidency, several policy shifts and broader economic changes significantly altered the landscape for these loans. From adjustments to repayment plans to broader debates about student debt relief, the Trump administration’s approach left a lasting impact—one that continues to shape discussions around education financing today.

The Basics of Parent PLUS Loans

Before diving into policy changes, it’s essential to understand what Parent PLUS Loans are. These are federal loans available to parents of dependent undergraduate students to help cover education costs not met by other financial aid. Unlike other student loans, Parent PLUS Loans are taken out by parents, not students, and they come with higher interest rates and fewer repayment flexibility options.

Key Features:

• Credit Check Required: Unlike most federal student loans, Parent PLUS Loans require a minimal credit check.
• Higher Interest Rates: Historically, these loans have had higher rates than undergraduate Direct Loans.
• Limited Repayment Plans: Until recently, parents had fewer income-driven repayment options compared to borrowers of other federal loans.

Trump’s Education Policy Landscape

The Trump administration’s approach to education financing was marked by deregulation, budget cuts, and skepticism toward broad student debt forgiveness. While Parent PLUS Loans weren’t the centerpiece of Trump’s education agenda, several policies indirectly—and sometimes directly—affected these loans.

1. Rolling Back Borrower Protections

One of the most significant moves was the dismantling of Obama-era regulations designed to protect student loan borrowers. For example:
- The administration repealed the Borrower Defense to Repayment rule, which made it harder for defrauded students (and by extension, their parents) to discharge loans.
- Efforts to weaken the Public Service Loan Forgiveness (PSLF) program indirectly impacted parents who worked in public service and hoped for relief.

While these changes didn’t target Parent PLUS Loans specifically, they created a less forgiving environment for all federal loan borrowers.

2. Budget Proposals Targeting Loan Forgiveness

Trump’s annual budget proposals repeatedly sought to eliminate or reduce key student loan forgiveness programs. For Parent PLUS borrowers, this meant:
- Proposals to end loan forgiveness for public servants, affecting parents who took out loans while working in qualifying jobs.
- Cuts to subsidized loan programs, shifting more financial burden onto families.

Though Congress largely rejected these proposals, they signaled the administration’s reluctance to expand debt relief.

3. Changes to Repayment Plans

The Trump administration did make one notable change that directly impacted Parent PLUS Loans: allowing them to qualify for Income-Contingent Repayment (ICR) plans. Previously, Parent PLUS Loans were excluded from most income-driven plans unless consolidated.

How This Helped (and Didn’t Help):

• Pro: Parents with high debt relative to income could now lower monthly payments.
• Con: ICR plans often extended repayment terms, increasing total interest paid over time.

This move was a double-edged sword—providing short-term relief while potentially exacerbating long-term debt.

The Broader Economic Context

Trump’s policies didn’t exist in a vacuum. Broader economic trends during his presidency also influenced Parent PLUS Loans:

1. Tax Cuts and Middle-Class Squeeze

The Tax Cuts and Jobs Act of 2017 lowered taxes for many Americans, but its benefits were uneven. For middle-class families already struggling with college costs, the savings often didn’t offset rising tuition and loan interest.

2. Pandemic-Era Relief (or Lack Thereof)

When COVID-19 hit, the Trump administration implemented a temporary freeze on federal student loan payments and interest—but Parent PLUS Loans were initially excluded. After backlash, they were included, but the delay highlighted the program’s second-class status in relief efforts.

The Legacy of Trump’s Policies

While Trump didn’t overhaul Parent PLUS Loans outright, his administration’s broader philosophy—prioritizing private-sector solutions over government intervention—left its mark. Key takeaways:
- Fewer Safeguards: Weakened borrower protections made repayment riskier.
- Mixed Repayment Reforms: Adding ICR eligibility helped some but didn’t address systemic issues like high interest rates.
- A Precursor to Today’s Debates: The Trump era set the stage for today’s heated discussions about widespread student debt cancellation.

For parents navigating the complexities of PLUS Loans today, understanding these policy shifts is crucial—because the ripple effects are still being felt.