Trump's grip on student loan debt may soon reach universities

Editor's note: Este artículo está traducido al español.

When Nina Fox graduated from UNLV in 2011, she carried $34,000 in student debt — a burden that would shadow her life for over a decade.

Despite making consistent payments, interest transformed that initial sum into $56,000 within 10 years, she said. Even after qualifying for the Public Service Loan Forgiveness program, Fox wouldn’t break free from her student loans until 2023.

Her 12-year odyssey toward loan forgiveness extracted a steep personal toll. The debt prevented her from buying a home and contributed to the end of her marriage.

Yet borrowing felt inevitable — the only viable path to a social work degree.

“I remember going down there to financial aid and trying to understand it, and at the end of the day, it’s so overwhelming that, in knowing that I didn’t have any other options, you just sign it,” Fox said. “In hopes that, ‘Hey, I’ll get a good job and it’s not going to be an issue in the future.’ ”

This financial burden reflects a nationwide crisis: the Congressional Research Service reports that federal student loan debt now exceeds $1.6 trillion, affecting 1 in 6 American adults.

President Donald Trump’s administration has pitched its fix for the growing number of borrowers, which includes ending a COVID-19 pandemic-related pause on certain payments, restricting forgiveness qualifications and emphasizing responsibilities for schools — an expectedly drastic contrast from the previous White House’s approach.

The Department of Education announced in April that it would resume collections from federal borrowers in default starting this month, saying those with extended delinquency could face legal or financial penalties. The end of the five-year hiatus comes with a stronger focus on an existing accountability measure: Institutions must maintain low cohort default rates or risk losing access to federal student aid programs.

While the standard isn’t new, the administration emphasized it would enforce a provision from the landmark Higher Education Act of 1965 saying institutions with excessively high cohort default rates become ineligible for federal aid programs, including Pell Grants and student loans, with limited exceptions.

The policy carries additional complexity not addressed in the department’s recent “Dear Colleague” letter. The act allows schools to appeal such decisions, requiring the education secretary to issue rulings — a process complicated by Trump’s legally contested efforts to eliminate the Department of Education entirely.

“For too long, insufficient transparency and accountability structures have allowed U.S. universities to saddle students with enormous debt loads without paying enough attention to whether their own graduates are truly prepared to succeed in the labor market,” Education Secretary Linda McMahon said a statement this month.

Nevada’s higher education institutions appear well-positioned to meet the federal requirements.

UNLV has maintained cohort default rates below 9% according to its data going back to 2006, peaking at 8.8% in 2011 and dropping to just 1.5% in 2019. The federal payment pause resulted in 0% rates for 2020 and 2021, though a university spokesperson said updated figures are expected this fall.

UNR has followed a similar trajectory, with its default rate reaching just 0.8% — affecting 28 students — in 2019, according to National Student Loan Data System records.

UNR attributes its low rates to comprehensive support efforts: free financial coaching for students and alumni, personalized financial aid videos in English and Spanish, and mandatory entrance and exit counseling for all borrowers as required by federal law.

“While the university has traditionally maintained a low CDR, we recognize the serious consequences of exceeding this threshold,” the university said in a statement to the Sun.

At the private Roseman University of Health Sciences, with two campuses in Southern Nevada and one in Utah, the last time the cohort default rate was above 0 was the 2018 fiscal year; it had a rate of 0.3%, said Jason Roth, its vice president of communications and partnerships. That comes even as Roth says 80% of students take out federal loans to pay for tuition.

“We look forward to seeing how CDRs evolve as the effects of the payment pause phase out and repayment trends stabilize,” Roth said. “As they are one indicator, among many, for gauging the success of our graduates.”

The Nevada System of Higher Education said every institution it oversees is staffed with financial aid professionals designated for working with students and borrowers to provide guidance on loan repayment options and available federal resources. That work will see some growth because of the Education Department’s ordinances.

“In light of recent federal guidance, NSHE institutions have expanded outreach efforts, including additional webinars, in-person and virtual sessions,” NSHE said in a statement to the Sun. “And other activities alongside the regular services they already provide, such as student loan counseling and other borrower support resources.”

The Dear Colleague Letter encouraged qualifying institutions to contact all former students, reminding them of their obligation to repay federal student loans not in deferment or forbearance before June 30. That approach is complicated by the fact that universities have little control over students once they graduate, said Bill Robinson, an assistant professor of economics at UNLV’s Lee School of Business.

“To punish the university for doing that is probably not an effective way to get students not to default,” Robinson added.

Universities have a responsibility to educate students about their financial options and prepare them for post-graduation realities, Robinson said. While UNLV has improved these practices over time, he noted the efforts didn’t gain significant momentum until the 2000s — as national student loan debt continued mounting.

Fox said she felt little support while navigating her loan situation, though she questions whether any formal education could have matched the lessons of lived experience. Having endured that 12-year journey, she now wholeheartedly supports student loan forgiveness programs.

“I think a lot of people are really against it, because they don’t know what it’s like.” Fox said. “Education is so important that it should be worth it to have an educated voting population at whatever cost.”

In one of his final acts in office, former President Joe Biden forgave loans for thousands more borrowers to bring his total debt cancellations to over 5 million people. Biden initially aimed to eliminate educational debt for 40 million Americans, but the Supreme Court struck down his comprehensive plan despite the administration’s revised proposals and persistent advocacy.

Trump has also taken steps to make the path to forgiveness less accessible.

He issued an executive order in March that tasked McMahon and Treasury Secretary Scott Bessent with retooling definitions for the Public Service Loan Forgiveness Program to exclude “organizations that engage in activities that have a substantial illegal purpose.”

The program was established under then-President George W. Bush’s final full year in office to allow qualifying borrowers making 120 monthly payments under a repayment plan and working full time for an approved employer to have the remainder of their balance forgiven.

Trump’s order said “public service” would disqualify groups “supporting terrorism” and groups aiding or abetting federal immigration law violations; his administration has used those terms broadly, like for describing pro-Palestinian protestors at colleges. 

Weighing in on Biden’s plan, 1984 UNLV graduate Charles Peterson said he believes in personal responsibility. He spent decades in Las Vegas and now resides in the Philippines in retirement.

“When I took out my loan, I took responsibility, and as soon as I graduated, within a month or so, it was paid off, and I moved on,” Peterson said. “So I feel everyone should pay this too. I shouldn’t have to pay for anyone else, and then people that don’t go to college, they shouldn’t be held responsible for paying for those that went.”

In the 1984-85 school year, the average cost of tuition and fees for a four-year university was $2,567, according to data from the National Center for Education Statistics. That cost would be around $14,622 in 2023, when the data was published; the country’s inflation rate has since been on the decline since that decades-level high. As of 2023, the average cost of tuition was $17,709.

Peterson’s argument had been made by some of the strongest critics of the Biden administration’s efforts. The former president had requested the Supreme Court to weigh in on the forgiveness plan in 2022 as it was being challenged by conservative coalitions and blocked by lower courts, an act Robinson recalled Republicans lauded at the time.

“When any judge today gets in the way of anything, they claim it’s overreach,” Robinson said. “So when we’re in that bind, Congress should deal with this.”

House Republicans have been working on their own efforts through the sweeping “One Big Beautiful Bill Act” that pitches changes including how loans are calculated and making a graduate or professional student ineligible for a Federal Direct PLUS Loan starting July 2026. The megabill, at over 1,000 pages, is awaiting action from the Senate, where it’s expected to be amended.

While Fox was able to alleviate her student debt, she still sees its impacts today.

“It’s sad and disheartening for the future students,” Fox said. “Like my own daughter who’s putting off going to college just knowing the debt and the issues that it creates when you have to carry student loans.”

Robinson said aspiring college students should explore every option they can before borrowing money — applying for lesser-known scholarships, guaranteeing all money possible is being used for someone with Pell eligibility, taking fewer credits per semester.

“Where they should start is not even thinking about a loan,” Robinson said. “A loan should be the last desperate act of a desperate person.”

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