A federal court blocked a student loan repayment plan put in place by the Biden administration in a move that could raise payments for millions as the Trump administration looks to unwind the former president’s cancellation policies and hopes to abolish the Department Education altogether.

Former President Joe Biden’s exit from the White House is bringing an end to most efforts to cancel student loan debt after it wiped out balances for five million borrowers despite having its signature forgiveness efforts blocked in courts.

President Donald Trump frequently criticized the efforts to cancel student loans as being illegal and unfair to Americans who don’t hold student debt. But he has not laid out his plans for handling student loans and has encouraged his education secretary nominee, Linda McMahon, to dismantle the department.

It is not yet clear what would happen to student loans and the $1.6 trillion debt portfolio the department manages if it were to be abolished. The U.S Department of Education also administers the Free Application for Federal Student Aid, which schools use to allocate financial aid and provides Pell Grants to low-income and other disadvantaged students.

Where things stand and what could change:

SAVE Plan blocked

A U.S. appeals court decision issued Tuesday blocked the SAVE Plan that would have lowered monthly payments for some borrowers and helped others get relief faster.

The three-judge panel ruled the SAVE Plan did not do enough to ensure balances are actually repaid and went beyond its legal authority by doing so.

“The Secretary has gone well beyond this authority by designing a plan where loans are largely forgiven rather than repaid,” the ruling says.

Much of the SAVE Plan has been held up by lawsuits since it was unveiled after the Supreme Court blocked Biden’s efforts to enact widespread loan forgiveness. It lowered monthly payments to $0 for some borrowers and provided forgiveness for smaller loans in as few as 10 years for smaller balances, half the time of the preexisting 20- to 25-year timeline.

The plan could have cost the government as much as $475 billion over a decade, according to an analysis by the University of Pennsylvania’s Penn Wharton Budget Model.

There are still multiple different income-driven repayment plans available to federal borrowers, but they do not come with terms as generous as SAVE. Borrowers who aren’t sure what plan would work best for them can use the loan simulator tool on StudentAid.gov that allows users to tailor to specific loan details.

Repayment plans being examined

Republican lawmakers are examining changes to federal student loans and other financial programs for colleges and universities in their push to enact tax cuts and fund other administration priorities through the reconciliation process that will not require Democratic votes.

Some options being considered to find savings in the budget process is increasing taxes on endowments and how many schools would be eligible to pay them, and to start making scholarships taxable, though it is still unclear whether either would be included.

One bill that would remake the loan repayment system, the College Cost Reduction Act, could be revived in the push to remake government spending. Among its many provisions are holding colleges financially responsible for tuition costs and leaving students in debt they can’t afford. It could bar the Department of Education from canceling debt-like plans under the Biden administration and restricting the amount of loans students can take out ,and sunset the Plus loan programs that allow parents to take on debt for their child’s education.

It would also prevent interest from capitalizing on student loans and streamline the repayment process.

A Congressional Budget Office analysis found the bill would save $185 billion over a decade, which could then be used to finance other priorities.

Department of Education on chopping block

Trump has pushed to eliminate the Department of Education and tasked McMahon with figuring out how to delegate the agency’s work to others across government to send education issues back to the states. The Education Department handles programs for special education and services for disadvantaged students, but its main responsibility is financial through student loans and billions in research grants and other funds to schools and universities.

Eliminating the Department of Education would require an act of Congress that is facing an uphill climb with slim Republican majorities. But some of the department’s responsibilities could be shifted to other parts of the government. During the campaign, Trump called for moving programs for low-income students and those with disabilities to states but has not yet offered details on how it would be handled.

A major question in eliminating the department would be what happens to the availability of federal student loans and which other government agency would become responsible for managing its $1.6 trillion portfolio. Some Republicans have pushed for the Office of Federal Student Aid, which manages federal student loans and other assistance, to the Treasury Department but there are concerns with the transition out of the Education Department.

CHave a news tip? Contact Austin Denean at atdenean@sbgtv.com or at x.com/austindenean. Content from The National Desk is provided by Sinclair, the parent company of FOX45 News..