In December, Congress passed one among President Donald Trump’s key priorities: tax cuts. These cuts primarily benefit the rich to the tune of $1.5 trillion in compensatory spending over 10 years. To buy it, the budget released in the week proposes cutting over $200 billion in student aid funding over subsequent decade by eliminating some sorts of federal student loans; changing the loan repayment safety net; and ending forgiveness for borrowers who add public service. And it might cut over $1.4 billion in annual grant aid and student support to low-income students.
Last week, a congressional budget deal raised caps in spending, amounting to a further $2 billion for education in both 2018 and 2019. To account for brand spanking new spending levels, Trump’s original budget proposal came with an addendum that walked back a number of the cuts in light of the new funds available.
Even with those tweaks, this raid on education programs is large enough to pay twice over for a decade of Trump’s inheritance tax cut, a giveaway for the youngsters of multimillionaires.
Cuts to student aid would push many students into more debt. it might do nothing to assist the thousands of scholars experiencing food insecurity or struggling to balance full-time work and child care while seeking a university degree. Some deserving Americans may hand over on the thought of attending college in the least .
To be fair, the budget does contain a couple of small, good ideas. This includes automatically enrolling delinquent borrowers into a program that might make their loans more manageable and requiring that faculties face some accountability if they can’t produce graduates who are ready to get decent jobs and repay their loans. However, the budget does nothing to meaningfully address affordability or equity for college kids from all backgrounds.
Trump Signs Budget Including $350m For Loan Forgiveness
In the spending bill passed by Congress in March 2018 to fund the government throughout September, Congress neglected many of the Trump administration’s budget offers including doing away with the Public Service Loan Forgiveness Program. Rather, Congress allotted $350 million for the Department of Education to assist borrowers with earlier unqualified repayment plans to get student loan forgiveness, and President Trump signed it into law. The idea of the PSLF was to entice graduates to use qualified public service jobs that helped the community and to allow forgiveness of every student loan debt for the borrowers after 120 payments over 10 years into an income-driven repayment plan. To usually be available for forgiveness under PSLF, you have to be on an income-driven repayment program. The $350 million is earmarked for the borrowers who meet whole requirements but were paying in a graduated or extended repayment plan, which is not usually available. But, $350 million is unlikely to include all who apply. The new program is named as the Expanded Temporary Public Service Loan Forgiveness program.
Based on what Trump has said so far, here are his other most visible views:
Trump requires to consolidate all current repayment plans into a single Income-Based Repayment program (IBR). This would occur in students paying 12.5% of their income to their loans every month and get complete loan forgiveness after 15 years.
He has made orders to cover increased forgiveness amounts (and the higher cost to taxpayers) because of shorter repayment terms by reducing federal spending accordingly.
Trump assures to scale back funding significantly for the Department of Education.
Will Trump discard the Public Service Loan Forgiveness?
He has not said this directly. But, he said that he requires to roll every current federal student loan programs within a single Income-Based Repayment program. One can only think that this would involve the Public Service Loan Forgiveness program too, but this is by no means guaranteed.
Trump’s cancellation of student loan protections can grow the federal government’s involvement.
The Department of Education has excluded Obama era protections to student loan borrowers that want to rehabilitate their loans.
By making rehabilitation of privately operated loans less attractive, borrowers are supposed to opt to skip rehabilitation and quickly combine their FFEL loans within the Federal Direct Loan Program to make use of income-based repayment programs. When borrowers do this action, it carries credits from private balance sheets to the federal government.