By Selina Stoller, Summit Consumer Receivables Acquisitions, LLC
President Trump’s new budget plan would alter student loan forgiveness programs.
According to Business Insider, the proposed budget would modify the Public Service Loan Forgiveness Program which helps individuals with jobs in the government or tax-exempt nonprofit organizations pay off their student loans – changing the number of years and amount students with federal loans must pay back.
The program was originally designed to incentivize individuals to enter low-paying, essential jobs. Currently, participants in student loan forgiveness program have payments no more than 10% of their discretionary income over ten years and usually struggle with insurmountable student loan debt.
Under Trump’s new budget, undergraduate student loan borrowers’ monthly student loan payments would be capped at 12.5% of discretionary income, and after 15 years of monthly payments, any remaining student loan debt would be forgiven.
This plan does leave graduate students to make up some of the savings. Graduate students would also have to make higher monthly payments and would not qualify for loan forgiveness until they reach 30 years of payments (up from 20 years).
Supporters of Trump’s new budget plan argue the changes actually benefit undergraduate students by decreasing the amount of time needed to pay off loans with a reduction in borrower’s total payments over the lifetime of the loan, but does increase monthly payments.
According to Forbes, the new proposal would impact those who borrow a new student loan starting July 1, 2019.
The proposed budget requires Congressional approval and will likely receive scrutiny before its passage.
- 23 Feb, 2018
- Summit Consumer Receivables Acquisitions, LLC