President Donald Trump is not necessarily known for his likability. His recent budget proposal that includes plans to eliminate the Public Service Loan Forgiveness Program will likely not help. The Public Service Loan Forgiveness Program, which began in 2007, provides federal student loan debt forgiveness to public service workers after 120 qualifying payments. This program, which has already received about 750,000 applications for debt forgiveness, has been a much-needed help to many public service workers that often are underpaid for the outstanding work that they provide for their communities. Trump’s proposal would impact students who borrow a new federal student loan beginning on July 1, 2019.
Trump’s proposal tampers with more than student loan forgiveness. He also plans to restructure the federal student loan repayment plans. Currently, there are several income-driven repayment plans. This proposal would create one income-driven plan that would require borrowers to pay 12.5 percent of their discretionary income instead of the current 10 percent. However, the proposal does reduce the payment plan length from 20 years to 15 years for students with only undergraduate student loans, while extending the time for students with graduate student loans from 25 years to 30 years. Further, the proposal would eliminate subsidized student loans. These loans prevent interest from accruing on the loans while students are in school. None of these changes can be effective until Congress approves. Hopefully, they will understand the burden that student loans can place on particularly lower-income Americans and find an alternative strategy.