What You Need To Know About Trumps Student Loan Forgiveness Proposal 2017
There have been several calls from the Trump administration to abolish the Public Service Loan Forgiveness (PSLF) which has been the top agency to aid in forgiving student loans. For now, many students are worried since they have to pay their student loans even ten years after graduating and without a job. However, the proposal is not yet a law, but in case it is passed by the relevant bodies it will take effect on 1st July 2019. The plan could face a lot of resistance especially after PSLF questioned its legality.
What exactly is in the Trump’s student loan forgiveness in 2017?
For the students who have read the Trumps loan forgiveness 2017 proposal are currently crossing fingers hoping the plan will not pass. The students will now find it hard to apply for the loans since the majority of the privileges will be eliminated. Here is what the proposal entails;
1. Reforming the loan repayment plans
Under the current law, the income-driven student loan repayment plan is capped at 10% per month. However, Trump aims to increase it to 12.5% which means the students will have to dig deep into their pockets once they get employed. He also proposes a reduction of the period it takes to get the loan forgiveness from 20 to 15 years. It might seem a good deal though for the low-income earners it might affect their lifestyle and budget. Graduates might be the casualties in Trump’s proposal since they will have to repay the student loan for 30 years before they can get forgiveness.
2. Abolishing the Public Service Loan Forgiveness Program
PSLF has been the sole government body mandated in evaluating the eligible candidates for student loan forgiveness. Trump's student loan proposal 2017 aims at eliminating the body and save $203 Billion for the next ten years which could be an excellent idea. However, the Congress seems unconvinced with the figure and instead are estimating it to be around $100 Billion. For, now it’s not clear who will take over the roles currently performed by the PSLF.
3. Ending the Subsidies on student loans
The undergraduate under the current law enjoy subsidized loans hence the loan does not accrue interest while still in school. Nevertheless, Trump wants to abolish the subsidies, and the student’s loan will start accumulating interest from the day it is taken. The students will now have tough times since they will end up paying huge interests. Again students will find it hard to repay the loans especially if they don’t get a well-paying job soon after graduating.
Trumps Student Loan Forgiveness 2017
What will be the immediate impact of this proposal
In case the proposal is passed then students will have no choice but to turn to private financial institutions for better student loan deals. Although private financial institutions can rarely give the students a better deal than the government, they can take advantage of the situation. Meanwhile, if you are planning to apply for the federal student loan from 1st July 2019, you might end up facing the new policies if the proposal is passed. If the relevant bodies decline the suggestion, then the current student loan conditions will remain.
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