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Editor: Paul L. Caron
Pepperdine University School of Law

Thursday, May 18, 2017

Trump Proposes To Dramatically Cut Law Student Loans

Washington Post, Trump and DeVos Plan to Reshape Higher Education Finance:

Budget documents obtained by The Washington Post show President Trump’s administration is proposing a raft of changes that could have significant impact on college students and graduates.

One of the most striking higher education proposals calls for replacing the five income-driven student loan repayment plans with a single plan to the benefit of undergraduate borrowers. As Trump promised last year on the campaign trail, the new plan would cap repayment to 12.5 percent of the borrower’s income and forgive the balance of the loan after 15 years. That would apply if the loans were taken out for an undergraduate degree. Anyone with graduate loans would expect to pay the same percentage of their income, but would only receive forgiveness after 30 years.

By comparison, the current income-driven plan, known as Revised Pay as You Earn (REPAYE), forgives outstanding debt after 20 years of payment for people with bachelor’s degrees and 25 years for those with advanced degrees, but in both cases the monthly bill is capped at 10 percent of discretionary income. That means, people with graduate degrees would expect larger monthly payments for a longer period of time, under Trump’s new plan.

“For grad students, this is a lousy deal,” said Ben Miller, senior director for postsecondary education at the left-leaning Center for American Progress. “Thirty years is like a mortgage. This would further encourage graduate student loan refinancing” to lower monthly payments.

Another change in the spending plan calls for the elimination of Public Service Loan Forgiveness,
a program that wipes away federal student debt for people in the public sector after they have made 120 qualifying monthly payments, or 10 years’ worth of payments. The program, enacted in 2007 under President George W. Bush, was designed to encourage college graduates to pursue careers as social workers, teachers, public defenders or doctors in rural areas.

http://taxprof.typepad.com/taxprof_blog/2017/05/trump-proposes-to-dramatically-cut-law-student-loans.html

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Comments

This is great news for the legal profession. Lawyers are so prosperous and successful, that they can be asked to pay back more of their student loans. Surely Betsy Davos read the study that a JD is worth an extra million dollars in lifetime earnings over a bachelor’s degree. There is no need to forgive the student loan debt of millionaires. Sure that was just one study. But as a few academics incessantly remind us, the study was published in a peer reviewed journal. That means the issue is settled. No peer reviewed study has ever been incorrect. Ignore all the other contradictory data.

This announcement comes at the perfect time too. An expert on the legal market has written extensively about how this has been another banner year for the legal profession. According to the BLS, lawyers earn a median salary of $118,160 (ignore the job outlook and other information on the BLS website).

If these statistics justify attending a failing law school, or keeping Whittier Law School open, then these statistics certainly justify making lawyers pay back more of their student loan debt.

Posted by: anon JD/MD | May 18, 2017 1:20:33 PM

Jordan Weissman actually sums it up fairly well at the Slate link:

"this still reads like a sick joke. A billionaire president and billionaire education secretary, neither of whom spent a single day of their lives in public service before stumbling their way into positions of immense power, are targeting a program that's basically meant to make life in underpaid government work a little more tenable. And don't talk to me about budget savings when this same administration is currently planning a historic tax cut for the rich. If you're even going to talk about fixing the budget, maybe try balancing it on the back of hedge funders first before sticking it to public defenders."

Posted by: Unemployed Northeastern | May 18, 2017 2:56:50 PM

UN, thanks for pointing out the snowflake whine of they day. Neener, neener, pumpkin eater,

Posted by: Dale Spradling | May 19, 2017 4:47:47 AM

This is red meat candyland. Trump can bluster all he wants, this has to go through Congress. Needless to say that requires political acumen, especially after comey, which he doesn't have. Dems will not attack their base nor do they want to be yelled at for failing to #resist by activists and government union folks

Posted by: Bobby | May 19, 2017 6:56:38 AM

My son graduated in the top 10% of his law school class at a top 40 law school that happens to be in the DC area. He still can't find a job. He is working in a think tank at 29 hours a week so they don't have to provide benefits. Boy...I wish he was making the "median" income of $118,000. He is not a recent grad either. He passed the bar in Virginia on the first try in 2013.

Posted by: Monte | May 19, 2017 10:00:30 AM

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