President Trump released his Fiscal Year 2019 Budget Proposal – a devastating blow to higher education funding that has created uncertainty for millions of Americans paying for college or managing their student loan debt. The plan cuts $200 billion from student aid programs over the next decade. It eliminates subsidized student loans that keep interest costs low for recent graduates.
The proposed budget also replaces existing income-driven repayment plans, which millions of people currently use to lower their monthly payments. Even worse, President Trump’s budget completely eliminates the Public Service Loan Forgiveness program that has been promised to student loan borrowers for nearly a decade. Here is a piece by CNBC covering the administration’s proposal.
This piece was originally published at CNBC.
Higher education faces massive changes in President Donald Trump’s spending plan.
The proposal unveiled would sharply curtail income-based loan repayment plans, scratch the Public Service Loan Forgiveness Program, embolden the government to go after students who don’t pay their loans and cut funding for federal work study in half.
Changes to loans would apply to borrowing after July 1, 2019, not including those loans provided to borrowers to finish their current education.
The budget would eliminate subsidized loans. Some 5.7 million students had subsidized loans in the 2016-2017 academic year, according to Mark Kantrowitz, a student loan expert.
The budget plan also would narrow the number of income-driven repayment plans — in which people pay back their loans at a rate that takes into consideration their income — from four to just one. Under that option, students’ monthly payments would be capped at 12.5 percent. Students generally pay 10 percent of their discretionary income under current income-based repayment plans.
However, undergraduate students would have their loans forgiven after 15 years, compared with 20 years now. So they’d be paying more per month, but less overall. Graduate students, meanwhile, would not have their loans forgiven for 30 years…
The Public Service Loan Forgiveness Program is eliminated in the proposed budget. This program allows former students who fulfill certain public service positions — such as public school teachers or health researchers — to have their loans erased after 10 years of on-time payments. Nearly two-thirds of student loan borrowers who’ve shown interest in the Public Service Loan Forgiveness earn less than $50,000 a year…