Trump’s Plan for Addressing Student Loan Debt
This election season was rough, and after Senator Bernie Sanders was no longer a candidate it felt as though student loan debt got shoved to the back of everyone’s political agenda. What remained of plans for student loan debt were small morsels added on to existing campaigns designed to attract millennials. Then the unimaginable happened and the U.S. elected you know who… Yea I feel the same about saying that human being’s name as the characters of Harry Potter felt about saying Voldemort’s name. Now you know who I voted for.
Anyway, political leanings need to fade into the background because half of the country was quite happy with themselves after the election. So as we move forward Repayable will be focused on helping you navigate student loan debt, no matter the regime controlling it.
With that let’s dive right in to what D.T. has to say about student loan debt.
Increasing College Accountability in Controlling Costs of Education
Mr. Trump’s website states that he will
“Work with Congress on reforms to ensure universities are making a good faith effort to reduce the cost of college and student debt in exchange for the federal tax breaks and tax dollars.”
This implies that he would financially incentivize colleges to reduce costs.
Access to College Education
Mr. Trump’s websites says he will
Ensure that the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, will be easier to access, pay for, and finish.
This statement doesn’t discuss how he plans to make college easier to access, pay for, and finish. However the statement above and the next statement address the affordability point.
One Income-Based Repayment Plan to Rule Them All
Mr. Trump’s plan for student loan debt is to create one income-based repayment program and eliminate the other repayment programs. His plan is to cap repayment at 12.5 % of income and forgive the unpaid amount after 15 years.
“And if borrowers work hard and make their full payments for 15 years, we’ll let them get on with their lives. They just go ahead and they get on with their lives.”
This plan would be a huge advantage for borrowers and come at a huge cost for the government. Unfortunately this plan alone fails (as all existing plans do) to deal with the actual problem, skyrocketing costs.
It also leaves a few questions unanswered:
Will the forgiven loan amount be taxed?
Probably. Currently, loan amounts forgiven under income-based plans are taxed as income.
What if your existing income-based repayment plan is only 10% of your income, will your payment go up?
If Trump goes with “one plan to rule them all” then yes, however if this program is just added on then you could still keep the payment plan you already have.
What happens to other forgiveness options like PSLF?
Trump is in favor of simplifying student loan repayment. That means that programs such as PSLF could be eliminated.
What does it take to start up this 12.5% 15 year repayment plan?
Trump doesn’t need Congress to do this. He can add his repayment plan directly through the Department of Education regulatory process, President Obama did this.
None of the above information is law or certain to come to pass. So it’s hard to say how exactly these ideas may shift and change over time and which of them will be implemented.
However, Mr. Trump does seem to think differently about student loan debt than many in the Republican Party. Unlike typical Republican views, that the government shouldn’t be involved in student loans, Trump at least says he believes in the government sharing responsibility for student loan debt.
For now be sure to stay out of default by making timely payments on your student loans. If you’re struggling to make your payments, enroll in an existing income-based repayment plan to cap your payments at 10-15% of your income.
What policy change would you like to see regarding student loan debt? Comment below or post on the Repayable Facebook Page to share your thoughts.
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