The race for the 2020 election is heating up. And vice chairman Biden has unveiled a bold student loan forgiveness plan. But President Donald Trump has made a couple of student loan forgiveness changes himself. And he has several more proposals on the table.
Trump’s student loan forgiveness changes began with the passing of the Tax Cuts and Jobs Act in December 2017. But Trump’s 2020 budget and 2021 budget proposes even bigger changes — including the consolidation of income-driven repayment plans and therefore the elimination of Public Service Loan Forgiveness.
Along with Trump’s decide to increase IDR payments to 12.5% of income rather than 10% and need borrowers with graduate degrees to buy 30 years rather than 20, borrowers overall would pay billions of dollars more under Trump’s student loan plan.
This guide covers all the changes to student loan forgiveness Trump has already made, potential changes in 2020 and the way they compare to other leading proposals. Collectively, we discover that student loan changes that Trump favors could cost borrowers a minimum of 1 / 4 of a trillion dollars over 10 years. Trump has much bigger student loan changes in mind. If his 2020 budget was approved the way he proposed, it might have had drastic effects on the scholar loan landscape. Here are a couple of of the notable student loan proposals included within the White House 2020 budget that weren’t ultimately adopted.
Here are the other moves the Trump administration has made:
The government “shouldn’t be earning money on student loans”—the only fix to this would be to reduce the interest rate for federal loans moving forward
Drop the Public Service Loan Forgiveness program (in favor of placing all borrowers in a single IBR)
Push colleges to cut tuition by decreasing high administrative costs
Reduce federal regulations on colleges to decrease their compliance expenses so they can pass those additions along to students
Universities will be assumed to contribute all of their endowment money going forward on their students (rather than “hedge fund managers”) to hold tuition low and cut student debt or risk losing their federal tax breaks
Potential tax-exempt status for big university endowments if schools don’t start making their degrees extra affordable for students
If he does adjust the IDR program as he has recommended, those interested in Income-Driven Repayment plans would have a bigger monthly payment, Though forgiveness would happen sooner.
Here are the important questions:
Here are the important notable questions:
No specifying of tax implications on forgiven student loan amounts
No specifying of bankruptcy reforms
So how will this change your student loans going forward? What should you do concerning it?
Recommendations for Borrowers:
1) Trump is obviously in support of a single IBR program going forward, which will have a less forgiveness period than the version currently in place. If you’re not, it may be useful to wait and see what happens with Trump’s stated new variant before you enroll. The shorter forgiveness time may end up protecting your money on the long-term.
2) Be sure to stay current on your student loans payments and out of default status. This is necessary because, in history, new student loan programs have been more hard for those in default to enrolling in. Holding your loans in good standing is an excellent method to keep your opinions open going forward.
3) At this point, there is no true knowledge accessible regarding how Trump’s student loan policies will change private loans, if at all. It may be best to just to wait and see what develops. This may give a chance to take benefit of better choices in the near future.
Clearly, there are still questions in the minds of student loan borrowers regarding how Trump’s future policies will change them. Rest assured that as things develop, Student Loan Resolve intends to give student borrowers with the most up-to-date data and guidance.
Will Trump forgive my student loans?
While nothing is set, it looks like whatever program Trump implements will have an end of term Trump Student Loan forgiveness as a component. His most recent thinking is that forgiveness has to be after 15 years of payments.