Federal Student Loan Repayment Paused, Funding for Illegal Aliens in Education Eliminated

This week’s top story from the Department of Education is a major development: the Biden-era SAVE student loan repayment plan is officially paused, with the Department set to restart interest accrual for 7.7 million borrowers starting August 1. This move comes after a federal court injunction blocked the plan and the Department’s zero percent interest status for enrolled borrowers. Secretary of Education Linda McMahon emphasized that the Department is shifting borrowers to legal, sustainable repayment plans, promising direct outreach to help affected individuals make a smooth transition. The SAVE plan, introduced under the previous administration, offered loan cancellation and zero monthly payments—benefits that federal courts have now deemed illegal. The Department says this change is about restoring “fiscal responsibility to the federal student loan portfolio” and ending what it called “taxpayer-funded litigation forbearance.” But that’s not the only headline. In a sweeping policy reversal, the Department announced this week it will end all taxpayer funding for illegal aliens in career, technical, and adult education programs. Secretary McMahon made it clear: “Under President Trump’s leadership, hardworking American taxpayers will no longer foot the bill for illegal aliens to participate in our career, technical, or adult education programs or activities.” This means Pell Grants, federal student loans, and related aid will only be available to U.S. citizens and eligible legal residents. The Department also issued a new rule ensuring compliance with long-standing federal law, and the changes take immediate effect. Along with these headline shifts, billions in federal grants—money meant for afterschool programs, teacher training, and migrant students—have been frozen as the Department reviews fiscal 2025 spending priorities. State and local school leaders now face immediate budget pressures, with at least $5 billion in question and no clear timeline for disbursement, according to notices sent to grant recipients this week. Education advocacy groups are warning this could imperil crucial school programming for the upcoming academic year. Looking at the broader context, these changes align closely with the Heritage Foundation’s Project 2025—the controversial policy blueprint now shaping the Trump administration’s education agenda. Project 2025 calls for fully abolishing the Department of Education, slashing Title I funding for low-income schools, and narrowing federal civil rights protections. While Congress still controls the fate of the Department itself, many of these priorities—like rolling back federal oversight, redirecting public dollars to private education, and eliminating critical regulatory protections—are advancing through executive action and administrative rules. For American citizens, the impacts are immediate and personal. Student loan borrowers must now select new repayment plans or risk default, and immigrant students face the This content was created in partnership and with the help of Artificial Intelligence AI.