The annual budget of Trump’s administration was released on February 12th. It was largely similar to the one released last year and mirrored the unwavering set of priorities of the Trump administration. This is especially true for the ones concerning the federal student loans.
The reforms that were made last year to the student loan budget pertain to the income-driven repayment system, loan forgiveness for students in public-service positions, and the subsidization of student loans. The reformation of the first and the elimination of the second two save billions of dollars per year.
The way that student loans are repaid is completely reformed. Student borrowers used to pay their loans as a share of their income. This was usually 10% above a certain threshold. Such borrowers received forgiveness for remaining sums after 20 years of consistent payment. Trump proposes boosting the percentage and increasing the payment period to 30 years for graduate student borrowers before receiving forgiveness.
Subsidy for undergraduate borrowers is eliminated. The budget eliminates interest-free loans for borrowers still enrolled in school.
The third reform eliminates the Public Service Loan Forgiveness – a program that grants forgiveness after ten years for borrowers working in government jobs or at most nonprofit organizations.
The Trump administration claims that all these cuts will save taxpayers $203 billion in the next ten years. The administration also proposes an increase of $300 million for funding the Federal Work-Study. The educational budget will also redirect $40 million yearly for short-term education programs with Pell Grant funding.