Here's how Trump's proposed budget could affect student loan borrowers
WASHINGTON, D.C.- Nearly 40 million Americans have at least one outstanding student loan, which could take years to pay off. But now, it might be a bigger challenge for borrowers because of a proposed change in President Trump’s budget.
Big changes like your monthly loan payment increasing and the time it takes for loans to be forgiven.
The President’s proposal would cut $9.2 billion dollars to the Education department’s budget.
Trump is calling to end the Public Service Loan Forgiveness, a federal program introduced by the Bush administration where loans for students, who go on to work in government or for non-profits, are forgiven after 10 years of income-based payments, instead of the current 20.
Although the program has some stipulations for borrowers, more than 400,000 people have planned their careers and financial futures around it. Many have been able to buy homes and start families despite having to pay off their debts.
The budget would also eliminate the subsidized student loan program, which provides low-income students’ loans at lower interest rates and pays the interest on loans while students are in school. By scrapping the program, the cost of attending college would increase.
Under the plan, graduate students would have to pay 12.5% percent of their salaries for 30 years, which some say is a burden compared to the Obama administration plan, which is 10% of their income over 25 years.
Aside from the cuts to the student loan program, the White House recommends cuts to programs that help students afford school while taking classes, like the federal-work study program.
However, some undergraduate students could benefit more from the changes. Low-income undergraduates could use Pell grants year-round, including summer courses, rather than just the fall or spring semesters.
None of this can be finalized without Congress’s approval.
Advocates and student loan borrowers are hoping to convince lawmakers to stop the proposed changes. According to a student loan advocacy group, student debt crisis, more than 40,000 people have sent emails to their members of Congress opposing the proposals.