MARQUETTE - During the first year of the Trump administration, the student loan delinquency rate rose nearly 25%, according to the Century Foundation.
Currently almost 9 million borrowers are in default, meaning they missed several payments and are at risk of having wages and tax refunds taken directly out of their accounts as payment toward their loans, according to the foundation, which is based in New York City.
In 2023, the federal Saving on a Valuable Education plan was created by the administration of then-President Joe Biden.
It was intended to reduce monthly loan payments for undergraduates, prevent loan balances from growing due to unpaid interest and make individuals eligible for loan forgiveness after 10 years, according to the U.S Department of Education.
The plan set payments based on the borrower's income, with the lowest being 5% of the borrower's discretionary income. Traditionally loan payments are calculated by the amount borrowed, the interest rate and the time period of the loan.
However, the department said the SAVE plan has been ordered shut down as of April 2026 due to federal court rulings that determined that the Biden administration exceeded its authority in authorizing such large-scale debt cancellations.
The department says beginning borrowers must leave the SAVE plan as of July 1 and find other legally approved repayment plans within 90 days.
"This change will limit access to higher education and push prospective students to explore the private loan market," said the Student Debt Crisis Center in Los Angeles.
The problem with the private loan market is that it doesn't offer loan forgiveness, borrower protections or repayment plans, the center said.
"Student borrowers are in crisis due in part to a rise in average debt and a decline in average wage values," the Education Data Initiative said.
When Biden created SAVE, Michigan Gov. Gretchen Whitmer hailed its impact on Michigan residents.
"The decision to cancel $10,000 in student loan debt and $20,000 for Pell Grant recipients will make a real difference for 1.4 million Michiganders that have student loans, putting money back in their pockets," Whitmer said in a press release.
Starting on July 1, President Donald Trump's One Big Beautiful Bill Act, which passed in 2025, will overhaul federal loans by introducing the Repayment Assistance Plan, according to the Department of Education.
The new plan will calculate payments based on income, and borrowers will have to choose between a fixed "standard" payment that many can't afford and an income-based option that may be too expensive for a large number of people, the Institute of College Access and Success reported.
"Proponents of the plan approach this as 'enabling borrowers to repay their debt more quickly,' which is another way of saying it requires much higher payments. This design approach reflects a fundamental misunderstanding of the purpose of income-based plans,"
the institute said.
The institute said earlier repayment plans were meant to help struggling borrowers stay on track and avoid default, even if they earned very little. But under the Repayment Assistance Plan, those same borrowers would have to pay more than under any other plan-making default much more likely.