President Donald Trump has had plenty to keep him busy since his election last year – nuclear threats from North Korea, attempts at revoking Obamacare and dodging multiple investigations into his alleged ties with Russia. With that, student loans and financial aid have been put on the back burner. So where does that leave students looking for ways to pay for college?
As of now, here is where the Trump administration stands on student loans and financial aid
– and at this time, they are merely proposals:
1. Student Loan Repayment
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The Trump administration has proposed to eliminate the five different income-based student loan repayment plans to just one option. This repayment plan would cap payments at 12.5% of a borrower’s income and then forgive the student loan balance after 15 years of responsible repayment.
2. Public Student Loan Forgiveness Programs
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There is also a proposal to eliminate the public loan forgiveness program. Enacted under George W. Bush, this program encouraged graduates to become social workers, teachers and public defenders in low-income areas in order to have their loans forgiven after 10 years of service. The reasoning for suspension of this program is that graduates would qualify for student loan forgiveness regardless under Trump’s new student loan repayment plan highlighted above.
3. Subsidized Stafford Loans
The subsidized Stafford Loan may be on the chopping block as well. These are the federal loans
available to students who demonstrate need and dictate that the federal government pays the interest on these loans while the student is in school. While Trump’s budget doesn’t call for the complete elimination of the program, it does suggest decreasing funds.
4. Pell Grants
Though most of Trump’s plans seem to center around eliminating funding for student loans and financial aid, he does want to expand the Pell Grant program. Currently, Pell Grants can only be used during the school year. Under Trump’s proposed higher education plan, students would be able to use the Pell Grants to pay for summer school as well, enabling them to potentially finish school sooner.
5. Student Loan Interest Deduction
The current GOP tax plan – Tax Cuts and Job Act – proposes a slash to the student loan interest deduction. Under the current plan, taxpayers can deduct up to $2,500 in interest paid toward specific student loans. If cut, it could affect 3 in 10 of the nearly 44 million Americans living with student loan debt, according to CNBC
Again, these are merely proposals at this stage. However, if and when any of the above plans are put into effect, we will provide updates here on Fastweb