President Trump has quite a bit on his plate these days: a Supreme Court nomination, nuclear talks with North Korea and midterm elections. Naturally, he hasn’t spoken (or tweeted) too much about student loans in the past few months. So where do student loans stand with President Trump now?
has provided a recent take on what we could expect from President Trump, where student loans are concerned, in the near future:
1. An end to student loan forgiveness.
President Trump and Betsy DeVos have long seen student loan forgiveness as a burden on taxpayers. According to their 2019 budget, they have proposed eliminating student loan forgiveness programs altogether. Those currently enrolled in student loan forgiveness would be able to continue on with the program; however, no new borrowers would be allowed to enroll.
2. Combining student loan repayment plans.
Currently, there are eight different types of student loan repayment plans, and the Trump Administration believes that’s too confusing. According to Forbes
, President Trump proposed to combine Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE) into one plan during his campaign.
3. More choices, more lenders.
reports that Trump believes allowing more lenders into the student loan market will be advantageous for borrowers and will prevent the federal government from making too much profit off of student loans. Because there would be more borrowers, they would have to compete with one another through lower interest rates. Borrowers would have the option to shop around for the best student loan deal.
What does this mean for you?
Right now – nothing. These are merely proposals by the Trump Administration. However, if he is able to pass some of these policies through Congress, it could affect the way you borrow and repay. But there are steps you can take now to maximize your student loan experience.
1. Borrow federal first.
If you do need to borrow money to pay for your education, borrow from the federal government before turning to private lenders. Federal student loans have the lowest interest rates, meaning there will be less to pay back after graduation. Though you must qualify for subsidized student loans, unsubsidized loans are available to anyone. Just file the FAFSA
in order to qualify.
2. Only borrow from the preferred lender list.
Every school’s financial aid office will keep a preferred lender list. This is a list of financial institutions that the school trusts and works with frequently. Try to stick to this list when borrowing from the college of your choice.
3. Do not borrow more than your expected annual salary.
A good rule of thumb when deciding how much to borrow is to look at projected salaries for the field you’re interested in pursuing. Once you find the average, avoid borrowing more than one year’s worth of that particular salary. This ensures that you’ll actually have the financial means to make your student loan payments.
4. Never miss a payment.
Once you have graduated, student loans typically come with a six-month grace period. That means you don’t have to start paying them back until November or December of your graduation year. In the meantime, set up auto debit payments from your checking account. This will ensure that you never miss a student loan payment, which can really work against you as you try to eliminate your student loan debt
5. Consider consolidating your student loans.
Finally, if you have multiple student loans, consider consolidating them into one big loan. That leaves you with only one large loan to keep track of and the chance of a lower interest rate depending on when you consolidate. Loan consolidation
also locks in a lower monthly payment, although that comes with a longer overall repayment time.
When it comes to student loans, it is most important to talk through options with your school’s financial aid office. A financial aid officer can spend time with you clarifying options and repayment plans as well as provide some sound advice on how much to borrow. Don’t be afraid to ask questions – it’s their job to help families pay for school in the most beneficial way possible.