Portions of the Trump Administration’s education budget have been leaking out in advance of the formal release of the budget expected next week. It’s important to note that there is a long road between a budget and actual changes enacted by Congress. But with the caveat that not all of the details are clear, here is our quick sense of what the changes to the federal student loan program could mean for future and perhaps current borrowers.
One major unknown is the extent to which these proposals would be applied to today’s borrowers or just to future borrowers. That is a political decision, but it also has a legal dimension: can the federal government take away a borrower benefit, such as Public Service Loan Forgiveness (PSLF), that students were counting on when they took out their loans? The budget documents so far do not indicate what stance the Trump Administration is taking.
| Who? |
What would change? |
What is the effect? |
| Undergraduate borrowers taking need-based loans |
Interest will be charged while borrowers are in school |
Borrowers will owe more when they graduate; the program will cost taxpayers less |
| Borrowers with undergraduate loans employed full-time in a public service job |
Payments capped at 12.5% of income instead of 10%, and payments end after 15 years instead of 10 |
Less generous for borrowers, reducing the incentive to enter public service careers; costs taxpayers less |
| Other borrowers with undergraduate loans |
Payments capped at 12.5% of income instead of 10%, and payments end after 15 years instead of 20 |
Probably a wash for borrowers, depending on their income trajectories |
| Borrowers with graduate school loans employed full-time in a public service job |
Payments capped at 12.5% of income instead of 10%, and payments end after 30 years instead of 10 |
Much less generous for borrowers, reducing the incentive to enter public service careers; costs taxpayers less |
| Other borrowers with graduate school loans |
Payments capped at 12.5% of income instead of 10%, and payments end after 30 years instead of 20 or 25 |
Less generous for borrowers; costs taxpayers less |
Tags: student debt, student loans, higher education funding, Trump administration, public service loan forgiveness
A Guide to Trump’s Proposed Student Loan Changes
Portions of the Trump Administration’s education budget have been leaking out in advance of the formal release of the budget expected next week. It’s important to note that there is a long road between a budget and actual changes enacted by Congress. But with the caveat that not all of the details are clear, here is our quick sense of what the changes to the federal student loan program could mean for future and perhaps current borrowers.
One major unknown is the extent to which these proposals would be applied to today’s borrowers or just to future borrowers. That is a political decision, but it also has a legal dimension: can the federal government take away a borrower benefit, such as Public Service Loan Forgiveness (PSLF), that students were counting on when they took out their loans? The budget documents so far do not indicate what stance the Trump Administration is taking.
Tags: student debt, student loans, higher education funding, Trump administration, public service loan forgiveness