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An Insight into Trump’s Possible Take on Student Loans

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  • Mellisa William
  • 384
  • Tuesday, March 14, 2017
Trump Student Loan Forgiveness

Today, a large number of student loan borrowers are speculating how America’s 45th President - Donald Trump, plans to deal with the current student loan crisis and how will it affect them? Many are also thinking how his choice for Secretary of Education - Betsy DeVos, will handle federal student loans. While being an out spoken advocate in many areas of education, she has not yet spoken on student loans.

These are Trump’s most solid views: -

(Do note that NONE OF THIS IS OFFICIAL. There is no actual program by the name of “Trump Student Loan Forgiveness.” We are simply keeping our readers updated on Trump’s possible views on student loan forgiveness.)

  • Consolidation of the current repayment plans into a single Income-based Repayment program (IBR) where the student could pay 12.5% of his monthly income towards the loan and will be able to receive forgiveness after 15 years.
  • Plans to cover increased forgiveness amounts and shorter repayment terms by lowering federal spending accordingly.
  • Promises to significantly increase funding for the Department of Education.

Here are a few other stances which he took: -

  • He also stated that the Government “should not be making money on student loans”—which could mean a lower interest rate on federal loans.
  • There were also some vague suggestions which state that he wants to get rid of the Public Service Loan Forgiveness program (and put all borrowers into single IBR).
  • Will push colleges to cut tuition fees by reducing large administrative costs.
  • Will reduce federal regulations on colleges in order to reduce their compliance cost so that they can pass on those savings to the students.
  • Universities will be required to spend all their endowment money on students to keep tuition fees low, and hence cut student debt. Otherwise, the university might lose its federal tax breaks.
  • Threatened the tax-exempt status of large endowments if the universities do not make their degrees more affordable for the students.

Here are some recommendations for our readers:-

  • Trump favors the single IBR program with a shorter forgiveness period as compared to the current version. If you are currently in distress or default on your loans, you should enroll in an Income-driven Repayment program. If that is not the case, you can wait for Trump’s version of the same before you enroll. The shorter forgiveness period will help you in saving money in the long run.
  • Ensure that you stay current on your student loans payments and avoid the ‘default’ tag. This is important because new student loan programs are difficult for those with default in the past.
  • Presently, we do not know how Trump’s student loan policies will affect the private loans. Therefore, our best advice right now is to simply wait and see what happens. This may offer you the opportunity to benefit from the better options in the near future.

 

Will he discard the Public Service Loan Forgiveness program?

Trump has not said this directly. However, he did say that he wants to roll all current federal student loan programs into a single Income-based Repayment program. One can only assume that this might include the Public Service Loan Forgiveness program too, but this does not mean that it is certain.

All in all, it is possible that we might hear some good news in regards to Student Loans from the latest POTUS. Stay tuned for more updates on Trump Student Loan Forgiveness.

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