What does Donald Trump think of your student loans?
Here’s what you need to know.
The presidential election is a few days away, and it’s important that you understand what Trump’s potential re-election could mean for your student loans. Let’s separate fact from fiction.
Cancel student loan debt
- There have been many proposals in Congress to write off student loan debt.
- Trump does not support these plans to cancel student loan debt for all student loan borrowers.
- Likewise, US Secretary of Education Betsy DeVos does not support the blanket cancellation of student debt.
- Could Trump cancel student loan debt? That’s unlikely in a potential second term. However, there is still potential for policy change.
Student loan forgiveness
- Trump supports the forgiveness of student loans.
- While Trump does not support the immediate and widespread cancellation of student debt, Trump supports the cancellation of student loans through income-based repayment plans.
- Trump has proposed simplifying multiple income-based repayment plans into one plan that would reduce bureaucracy, complexity, and confusion.
- Trump wants undergraduate borrowers to get their student loans forgiven in 15 years (instead of 20 years).
- Trump wants graduate borrowers to get their student loans forgiven in 30 years (rather than 30 years).
- In exchange for early cancellation of student loans, student borrowers would pay 12.5% of discretionary income (up from 10% currently).
- Trump does not support “the free university”.
- Senator Elizabeth Warren (D-MA) and Senator Bernie Sanders (I-VT) were the first supporters of the tuition-free university.
- However, Republicans in Congress and Trump did not support these policy proposals.
Public service loan forgiveness
- Trump has proposed eliminating the public service loan forgiveness program.
- Trump believes that student loan cancellation should be available as part of income-tested repayment plans.
Student loan relief
- Trump has taken unprecedented executive action this year to provide student loan relief.
- Through executive action, and later in concert with Congress, Trump provided economic assistance to student borrowers with federal student loans such as direct loans.
- Trump has temporarily suspended federal student loan payments.
- Trump also temporarily set federal student loan interest rates at 0% so that no new interest accumulates during that time.
- Trump has also halted the collection of defaults on federal student loans.
- Congress incorporated this student loan relief into the Cares Act, which is the $ 2.2 trillion stimulus package that Congress passed in March.
- Trump has extended this student loan relief until December 31, 2020.
Other student loan proposals
Other student loan proposals include ending federal subsidized student loans and capping the amount of certain student loans you can borrow.
Ending subsidized student loans
- Trump has proposed ending subsidized federal student loans.
- Subsidized student loans do not earn interest while you are enrolled in school.
- If federal subsidized student loans are phased out, you will be borrowing unsubsidized student loans, which will start to accrue interest after disbursement.
Cap student loans
- Trump has proposed putting a cap on the amount of federal PLUS loans, which parents can borrow for their dependent children and which borrowers can borrow for higher education.
- Trump would limit the amount of PLUS loans to $ 50,000 per year and $ 100,000 in total.
- Trump would limit the amount of Parent PLUS loans to $ 26,500.
- The reason for limiting the amount of student loans is to limit the amount of student debt that a borrower can assume.
Will Trump cancel student loans?
- Will Trump cancel student loans?
- Trump and DeVos oppose immediate cancellation of student loans.
- Republicans in Congress do not support sweeping student loan forgiveness plans.
- Warren and Senate Minority Leader Chuck Schumer (D-NY) have proposed that Trump be authorized by Congress to write off up to $ 50,000 in student loans for all borrowers.
- Congress did not pass this legislation, or any legislation, to cancel student loans.
Pay off student loans
Regardless of who wins the presidential election, it’s important that you have a clear plan for paying off student loans. Here are some good starting points, all free:
Student loans: reading
What this Navient lawsuit means for your student loans
Should You Refinance Student Loans Now?