- Thomson Reuters
- President Trump released a proposed budget Monday that would axe certain student loan forgiveness programs.
- These programs were developed to help borrowers struggling under insurmountable debt and to incentivize individuals to enter into low-paying, but essential jobs.
- The budget plan drew ire from some student loan borrowers.
President Donald Trump unveiled a budget plan Monday that appears to put a slew of loan forgiveness programs in peril.
The proposed budget would dismantle the Public Service Loan Forgiveness Program, a plan which helps individuals with jobs in government or for a tax-exempt nonprofit organization pay off their loans, and would change the number of years and amount that students must pay back loans under loan forgiveness programs, which are set up to help individuals whose loan payments are more than 10% of their discretionary income.
The programs in question were developed to help borrowers struggling under insurmountable debt and to incentivize individuals to enter into low-paying, but essential jobs.
Upon learning of the proposed changes to borrowing plans, some students expressed outrage.
This all makes me beyond furious. Especially the ending of public service loan forgiveness when I’m 8 years into the program. https://t.co/qWVno4PXuP
— Jamie Harkins (@JamieHarkins) February 14, 2018
@realDonaldTrump You have to be kidding me with your new proposed budget ending student loan forgiveness and income based programs. You CONTINUOUSLY show how you dont give a damn about low-mid income Americans you are such a joke & I cannot wait until your term is up
— ShonieB (@SheSaidThat_Yep) February 14, 2018
We get it. We don't do it for the money. I took a pay cut to come here, & I'm not the only one. BUT the one carrot we get is the ten-year-loan-forgiveness program.
This is important BECAUSE my unsubsidized loan payments each month are mostly interest
— Spencer Ellsworth (@Spencimus) February 14, 2018
So I’ve worked in public service for 12 years, paid back $55k on my $27k federal student loan, & immediately qualified for the Public Service Loan forgiveness program started in Oct.
Now, as I wait for paperwork, I find out the new fed budget will eliminate the program.
— Van Allen Plexico (@VanAllenPlexico) February 14, 2018
Proponents of Trump’s plan argue it actually benefits undergraduate students by decreasing the amount of time needed to pay off loans, but increasing the percentage of discretionary income they must pay.
“The net effect is a significant reduction in a borrower’s total payments over the life of the loan, which is why the president would limit this new benefit to undergraduates,” The National Review’s Jason Delisle wrote.
But that leaves graduate students on the hook to make up some of the savings. “To offset the cost of this more generous program, graduate students would also have to make the higher monthly payments and would not qualify for loan forgiveness until they had reached 30 years of payments, up from 20,” he wrote.
The proposed budget requires Congressional approval and will likely receive scrutiny before its passage.