Student Loan Forgiveness Cut from Federal Budget

Betsy DeVos, current secretary of the Department of Education

Saul Loeb

Betsy DeVos, current secretary of the Department of Education

Sam Janis, Co-Editor-in-Chief

For the third time in his presidency, Donald Trump has proposed cuts to the Student Loan Forgiveness Program in the federal budget.

The federal budget is always a contentious topic and is even more so this year. The government shutdown earlier in the year and multiple national speeches that President Trump has made have been about the budget.

The White House recently released the 2020 budget that President Trump proposed to Congress. The current budget includes $64 billion for the Department of Education. This may seem like a lot of money, but the DOE is taking a 10% cut from last year’s budget. Under this plan, the Student Loan Forgiveness program would be scrapped. This plan gave people who work more than 30 hours a week in eligible federal, state, or local public service jobs forgiveness on their student loans. His proposal would impact borrowers starting on July 1, 2020.

The proposal also decreases the number of repayment plans, such as IBR, PAYE, and REPAYE, to one plan that caps payments at 12.5% of the borrower’s income. This still includes both graduate and undergraduate loans; however, the repayment term for undergraduate loans would be dropped to 15 years while graduate loans would be extended to 30 years. This could help undergraduate students by giving them forgiveness in a simple way sooner.

Trump also wants to end government-subsidized Stafford loans. Students’ loans would start accruing interest while they are in school. This would save the government money, but increase the costs for student borrowers. The Federal Work-Study program would also end. This program currently gives postgraduate students part-time jobs to help pay for their education.

The plan that Trump has proposed is not set in stone and has to pass through Congress before being enacted. The budget also includes the $8.6 billion President Trump wants for the border wall. The plan isn’t expected to pass through the Democratic-held House of Representatives and will need to be revised to gain the necessary votes to be accepted. The cuts on loans are interesting for new students. With interest rates rising, students will be in debt more than ever. Going to college will be a harder decision for more families in the future.