Thursday, May 18, 2017
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.