This article is part of a series from the Center for American Progress exposing how the sweeping Project 2025 policy agenda would harm all Americans. This new authoritarian playbook, published by the Heritage Foundation, would destroy the 250-year-old system of checks and balances upon which U.S. democracy has relied and give far-right politicians, judges, and corporations more control over Americans’ lives.
For decades, far-right lawmakers have pushed ideas that would weaken higher education in the United States, including, blocking efforts to allow student borrowers to earn cancellation, allowing predatory actors to take advantage of students, and even eliminating the U.S. Department of Education. But a sweeping new agenda from the Heritage Foundation called Project 2025 serves as an authoritarian road map to implement destructive new policies, including a new student loan repayment plan that would force student loan borrowers to shell out thousands more each year in payments.
Project 2025 proposes phasing out existing income-driven repayment (IDR) plans for student loan borrowers, such as the Biden-Harris administration’s new Saving on a Valuable Education (SAVE) plan, and replacing it with a one-size-fits-all IDR plan. The Project 2025 repayment plan offers limited flexibility to account for borrowers’ financial picture and eliminates SAVE’s interest benefit, threatening to bring back ballooning balances even for borrowers who make on-time monthly payments. This would be a devastating blow to the millions of Americans every year who must take out debt in order to obtain a higher education and pursue a path to America’s middle class.
Under Project 2025, borrowers would see an increase in monthly payments
If enacted, Project 2025’s blueprint for student loan payments would eliminate the SAVE plan, the most affordable repayment plan in history. Replacing SAVE with the Project 2025 repayment plan would significantly increase many borrowers’ monthly payments, adding additional financial strain to those who already struggle with their student loan debt.
Additional annual payments for typical earners ages 25–34 under the Project 2025 plan
$2,761
Additional annual payment for borrowers with some college, but no degree
$2,933
Additional annual payment for borrowers with an associate degree
$4,064
Additional annual payment for borrowers with a bachelor's degree
$2,685
Additional annual payment for borrowers with a master's degree
Figure 1 shows how student borrowers ages 25–34 with earnings around the median among those with their level of educational attainment would be affected by the Project 2025 repayment plan. Those who attended college but did not earn a degree or credential would see their monthly payments almost quadruple, while borrowers with associate degrees would see their payments more than triple. Typical borrowers of all education levels would shell out at least $2,700—and as high as $4,000—more per year in student loan payments on this plan relative to the SAVE plan.
A vast majority of the 8 million borrowers currently enrolled in SAVE would see their monthly payments go up under the Project 2025 repayment plan. In addition, the Project 2025 plan would lower the income threshold at which borrowers are required to make a payment from the current amount under the SAVE plan, $34,000 (225 percent of the federal poverty line), to $15,000, or the federal poverty line. That means single borrowers making as little as $15,000—or a family of four living on $31,000—would have to begin making monthly student loan payments.
A vast majority of the 8 million borrowers currently enrolled in SAVE would see their monthly payments go up under the Project 2025 repayment plan.
Project 2025 would bring back ballooning balances
This far-right agenda permits runaway interest on student loans, so some borrowers might still see their balance grow even if they make payments. This continues a phenomenon that plagues many borrowers and that is often caused by deferments, forbearances, interest capitalization, or simply because a borrower did not earn enough from their education to afford to repay their debt. Data from 2015–2016 indicate that at 12 years after enrollment, 27 percent of all borrowers owed more than they originally borrowed, with this share being even higher among Black borrowers (52 percent), Pell Grant recipients (33 percent), those from families near or below the poverty line (31 percent to 34 percent), those without a degree or credential (31 percent), and those with an associate degree or certificate (30 percent).
For example, a typical Black K-12 classroom teacher with graduate debt who began repayment in 2024 would see their balance grow for the first eight years of repayment—even as they made payments—under the Project 2025 plan. (see methodology for more information) Starting with a median debt of about $70,000 for their graduate and undergraduate education, but seeing a starting salary of only around $52,000, this teacher’s monthly payment the first year of repayment would be $308: a substantial sum, yet not enough to cover the $325 that accrues in interest every month. Because Project 2025 would also eliminate the Public Service Loan Forgiveness program and the maximum repayment terms on IDR plans, this teacher would pay for a total of 27 years. Others with higher debts, lower incomes, or both may get caught in a debt trap, in which their monthly payments would never cover the growing interest on a ballooning balance. Project 2025 would force them to pay in perpetuity.
Under Project 2025 policies, this teacher would ultimately pay about $150,000, more than double their original principal. Their monthly payments would begin at $308 and rise to an estimated $678 after 27 years, assuming 3 percent annual wage growth.
By contrast, under the SAVE plan, this K-12 teacher would have a $117 monthly payment, and the additional $150–$200 in interest that accrued each month would be waived to prevent the outstanding balance from growing. A borrower’s payments would increase over time as their income grows and therefore eventually cover higher shares of the interest. If this teacher qualified for Public Service Loan Forgiveness, they would pay $17,000 over 10 years. If they did not, they would pay a total of $56,000 over 25 years under the SAVE plan. In both cases, their monthly loan payments would go entirely to interest, and the remaining original principal of about $70,000 would be canceled.
The SAVE plan and existing debt cancellation pathways help reduce the burden on individuals, including many teachers, whose incomes are too low to service their debt without extreme hardship. Project 2025 policies, by contrast, would impose burdensome monthly costs on these essential public service workers and close off pathways to earned relief.
Under Project 2025, millions of borrowers would be denied earned debt relief
In addition, existing programs for teachers and public service workers, such as law enforcement officers and nurses, would eliminate the remainder of this K-12 teacher’s debt after a defined period of employment. Depending on the subject they teach and the type of school they teach at, they may be eligible for the Teacher Loan Forgiveness program, which cancels $17,500 in debt after five years of service. After 10 years, they would be eligible for the Public Service Loan Forgiveness program, which would cancel the remaining balance. (A teacher may be eligible for both but cannot receive credit for both for the same period of service.)
Project 2025, however, seeks to eliminate any “time-based and occupation-based student loan forgiveness” programs such as these. In combination, eliminating these programs promises to entangle many public service workers with high debt-to-income ratios in a lifelong debt trap.
For all other borrowers, the Project 2025 IDR plan would eliminate earned cancellation for people who have already been paying off their loans for many years. Such a change would require congressional action; in the absence of legislative change, Project 2025 proposes extending the cancellation timeline to the current statutory maximum of 25 years. Under current policies, undergraduate student loan borrowers on all IDR plans who make their required payments will see their remaining balances forgiven after 20 years, while those who hold graduate loans will experience this benefit after 25 years. For borrowers with low balances, the SAVE plan offers a shortened timeline to cancellation in as little as 10 years. There are currently 12.7 million people enrolled in IDR plans, some of whom would lose out on these earned cancellation opportunities after making their maximum number of payments.
Project 2025 would wreak havoc on student loan borrowers’ credit
While the full impact of the SAVE plan on default rates is yet to be determined, in its absence, the student loan system is likely to see default rates similar to those for cohorts of borrowers beginning repayment in 2012 to 2017, when IDR plan monthly payment options were similar to those in Project 2025 and before the pandemic payment pause affected reporting. During that period, the share of borrowers who defaulted within three years of beginning repayment ranged from 10 percent to 12 percent. This means more than 1 in 10 borrowers saw their credit scores lower, with consequences such as higher interest rates or difficulty acquiring new lines of credit, as well as more severe consequences such as wage or Social Security garnishment. Project 2025 threatens to return student loan borrowers to a time when expensive monthly payments both imposed daily burdens on borrowers and harmed their long-term financial well-being.
Conclusion
Since the SAVE plan debuted in August 2023, nearly 8 million borrowers have enrolled, including 4.5 million borrowers with a $0 monthly payment. The other 3.5 million save an estimated $117 per month, or about $1,400 per year, on average. In addition, about 360,000 low-balance borrowers have already received $4.8 billion in relief from the SAVE plan’s shortened timeline to cancellation.
One in 3 borrowers ages 25 to 49 rely upon an IDR plan to afford their student loan payments and would see their repayment plan options severely restricted if the Project 2025 proposal were adopted. This far-right vision for student loan repayment would fail to provide affordable repayment options to those who are most likely to struggle with their loans and experience default. An estimated 85 percent of community college borrowers, who likely have low balances, would still be saddled with their debt, even 10 years later.
Creating affordable repayment options is essential to ensuring student loan borrowers do not have to choose between making on-time payments and meeting their basic needs. Instead of alleviating the burden imposed by student loans, Project 2025 would make monthly loan payments a financial anchor for millions, push more borrowers into default, and force others to pay in perpetuity.
Methodology
Figure 1
The approximate percentages of the student loan borrowers by education level are estimated using data from the Federal Reserve’s 2020–2022 Surveys of Household and Economic Decisionmaking (SHED) and the U.S. Census Bureau. The data from the 2020, 2021, and 2022 survey years were pooled for these estimates. The SHED data showed the proportion of the population that reported currently holding student loans for their own education, by educational attainment level. Those whose education level is high school degree or GED certificate and who reported holding student loan debt (28 percent) were included in those with “some college, no degree” in this figure. Those who hold a “certificate or technical degree” (6 percent) were not included because corresponding income data were not available. Similarly, SHED includes data for “graduate degree” holders, and not master’s degree holders specifically. The share of this group that are master’s degree holders (rather than doctoral degree holders) was estimated from U.S. Census Bureau data on educational attainment, which shows that approximately 80 percent of those with graduate degrees hold master’s degrees, while 20 percent hold doctoral degrees. The 12.85 percent of SHED survey respondents with student loan debt who hold graduate degrees was then adjusted to assume 80 percent of these, or approximately 10.28 percent (rounded to 10 percent) of all graduate degree holders hold master’s degrees.
The financial impact of the Project 2025 repayment plan on workers ages 25–34, by education level, was estimated using 2023 data from the U.S. Bureau of Labor Statistics’ Current Population Survey (CPS) , which is available at https://www.bls.gov/cps/earnings.htm#education. Median annual earnings by education level were derived from median weekly earnings. Discretionary income under SAVE is defined as the annual income minus 225 percent of the federal poverty guidelines (FPL). The calculations in Figure 1 use the 2023 FPL of $14,580, and the calculations assume a family size of one.
The SAVE plan monthly payment amount is calculated as 5 percent of discretionary income for undergraduate loans and 10 percent of income for graduate loans. The monthly payment projection for master’s degree borrowers assumes an effective discretionary income percentage of 8.5 percent for a borrower whose debt loan comprises 30 percent undergraduate and 70 percent graduate debt, approximated from the average federal student loan debt levels for master’s degree borrowers in 2020 according to the National Center for Education Statistics’ National Postsecondary Student Aid Study (retrieval code “vgdcbk”).
Because the SAVE plan was not introduced until August 2023, and the discretionary income calculation for undergraduate loans will not be reduced to 5 percent until July 1, 2024, these should be considered estimates based on the latest CPS data available (2023).
The Project 2025 plan monthly payments are calculated as 10 percent of discretionary income, which the plan defines as annual income minus 100 percent of the FPL.
The median annual earnings figures in Figure 1 represent all workers ages 25–34 across the United States, and not necessarily student loan borrowers. Student loan borrowers’ incomes may systematically differ from workers of similar education levels. This figure should be interpreted, therefore, as the theoretical impact on student loan borrowers whose incomes are similar to the median of their age group and education level.
Example: Typical Black K-12 teacher with graduate debt who began repayment in 2024
These data derive from the U.S. Department of Education National Center for Education Statistics’ Baccalaureate and Beyond Longitudinal Study, 2016/2020, available at https://nces.ed.gov/surveys/b&b/. The names of the variables used in this analysis are: B2FEDCUM1, B2FEDCUM2, B2FEDCUM3, B2ALLINC4YRS, RACE, B2EVRGRDENR, B2PBENM48, and B2CURREGTCH, and the analysis can be retrieved using the code “ulijah” at https://nces.ed.gov/datalab/. This analysis uses baseline data found in this survey to project what a Black K-12 teacher with graduate debt who earned their bachelor’s in 2020 and began repaying their debt in 2024 would pay under the SAVE versus Project 2025 plans.
The results indicate that the median undergraduate debt for a Black K-12 teacher who had attended but was not currently enrolled in a graduate program was $30,707, and graduate debt was $36,741, for a total estimated debt of $67,448. These numbers align with findings from a 2021 National Education Association report that found that 26 percent of P-12 teachers who borrowed for their education took out more than $65,000 in debt. Young educators and educators of color also had higher debt loads than their older and white peers. The data indicate that this group of borrowers had a median annual income of $46,263. These numbers were updated to reflect the increased borrowing rates of 1 percent per year for both undergraduate and graduate debt. An average wage increase rate of 3 percent per year was assumed for a 2024 salary of $52,069.
Interest rates were approximated at 4 percent for undergraduate loans and 7 percent for graduate loans based on historical federal student loan interest rates. The weighted interest rate was used for calculating the monthly accrued interest. Student loan interest compounds daily, so the monthly interest rate was found by dividing the annual interest rate by 365 and then multiplying by 30. It should be noted that interest only accrues on the principal and does not capitalize.
The monthly payments under the Project 2025 and SAVE plans from 2024 onward were then found by assuming a 2.8 percent annual increase in the FPL, based on the historical average. Teacher pay was estimated to increase 3 percent per year, a conservative estimate relative to other occupations given that teacher pay has historically risen at lower rates than the pay for other workers.