Project 2025 and Its Impact on Student Loan Repayment Plan

Student loans now come with a bigger price tag.

Federal student loan debt is already a heavy financial burden for more than 42 million Americans. However, with the implementation of Project 2025, things could get a lot worse. 

Project 2025 is a 922-page policy agenda published by The Heritage Foundation, a conservative think tank, in April 2023. 

The document outlines plans for a radical restructuring of the federal government, including major changes to student loan repayment.

One of its key proposals is the elimination of all income-driven repayment (IDR) plans, including the Biden-Harris administration’s Saving on a Valuable Education (SAVE) plan.

What’s Set to Change Under Project 2025?

Project 2025 calls for the phasing out of all IDR plans, including SAVE—the most affordable repayment plan in history. The aim is to replace these plans with a “one-size-fits-all” payment model.

For the 8 million borrowers currently enrolled in SAVE, this change would mean an increase in monthly student loan payments.  

According to the Center for American Progress, under this new model, borrowers could pay 1.3 to 2 times more each month, with increased payments adding up to $1,822 per annum.

What’s more, the income threshold for repayment would drop from roughly $34,000 to $15,000. In other words, borrowers earning just $15,000 a year could be forced to start repaying their loans.

And that’s not all. Without SAVE’s protections, default rates are expected to rise sharply, which could hurt borrowers’ credit scores and cause them serious financial stress.

Project 2025 also aims to end the Public Service Loan Forgiveness program (PSLF), which has already cleared $69.2 billion in student debt for nearly 1 million borrowers. Without PSLF, 3.6 million public service workers could be saddled with over $250 billion in additional student loan debt over the next decade.

What This Means for Black Student-Loan Borrowers

For many Black students, loans are a necessity, not a choice. As a result of systemic disparities in income and wealth, they’re more likely to take out student loans to pay for college.

Unfortunately, Project 2025’s proposed changes threaten to increase the financial strain on Black borrowers.

Here’s how:

1. Increased Debt Burdens

Black students already graduate with more student loan debt than their White peers. Research shows that 43.3% of Black women & 32.1% of Black men who’ve attended college still carry student debt—compared to just 15.7% of White men & 19.9% of White women.

By raising monthly payments, Project 2025 could make it harder for Black borrowers to manage their debt.

2. Ballooning Loan Balances

It may look like you’re not repaying your loans, even if you are.

The elimination of interest subsidies would cause loan balances to grow even while borrowers are actively repaying. Over time, this could lead to overwhelming debt loads.

3. Heightened Risk of Predatory Lending

Project 2025 pushes for the privatization of student loans (which would turn over student lending to for-profit lenders). This would leave Black students more exposed to high-interest rates and exploitative lending.

4. Widening the Racial Wealth Gap

With fewer affordable repayment options, it becomes even harder for Black graduates to build wealth through homeownership, investing, or saving.

5. Higher Likelihood of Default

Project 2025’s stricter policies could spike default rates among Black borrowers who already find it tough to keep up with payments due to structural inequality. 

This, in turn, could damage their credit scores and create long-term financial setbacks.