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Trump’s Budget Would Kill a Major Student Loan Forgiveness Program, but Only for New Borrowers

NightSky

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Trump’s Budget Would Kill a Major Student Loan Forgiveness Program, but Only for New Borrowers

As was widely expected, President Trump's new budget calls for eliminating a major student loan forgiveness program designed to help government and nonprofit workers, such as lawyers, teachers, and social workers. Those who have already taken on debt for school may not need to worry for now, however, because it appears the administration only wants to end the program for new borrowers.

The White House is proposing an overhaul of the student lending system that would streamline many of the options the government currently offers borrowers for paying down their debts. As part of those reforms, it would end the Department of Education's Public Service Loan Forgiveness program, or PSLF, which wipes borrowers' balances after they spend 10 years working either for a government or nonprofit employer. A good number of readers panicked when I wrote about this possibility last week—yes, I saw all your emails and tweets—since it wasn't clear if people currently paying their loans would be grandfathered into the program. Many, many young adults have gone deep into debt for grad school in order to pursue relatively low-paying careers in the public or nonprofit sectors on the assumption that PSLF would be around to sweep away their loans after a decade (full disclosure: my wife is one of them), and no small number have been worried that Washington might pull the rug out from under them.

Trump’s proposed budget says changes to the student loan program, including PSLF, would only apply to those who start borrowing after July 2018. (I’ve contacted the Department of Education to confirm my reading of the budget and am waiting on an answer, but the text seems pretty straightforward.)
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To be clear, I am leading with the good news here because I know there are droves of people who've been freaked out that the Trump administration might scrap the program they staked their financial futures on. However, this budget is still pretty brutal on students. Aside from nixing PSLF for future generations, it ends subsidized loans for low-income students and milks an additional $76 billion from the student loan program over a decade, in part by making students pay more of the earnings each year under a revised income-based repayment plan. The changes might work OK for those who only have undergraduate loans, since they will now qualify for forgiveness after 15 years under income-based repayment, rather than the current 20. But those with graduate debt will have to spend 30 years paying back their loans before getting them forgiven, instead of 25. Given that graduate degrees are only becoming more essential in the workplace, even in lower-paid careers like teaching, it seems like a pretty raw deal for the next generation of kids on campus.

How much of this could Trump actually accomplish? The White House would need Congress' help to end PSLF or subsidized loans. But it seems possible the administration might try to restructure income-based repayment on its own, given that President Obama took unilateral action to expand the program. Beyond that, there are plenty of conservatives on Capitol Hill who would be happy to increase costs on students in the name of budget savings, and given that higher education tends be a second-tier issue in Washington, a lot of these initiatives could be slipped quietly into larger bills. Without an outcry, I wouldn't be surprised to see some of these plans become a reality.

I don't think this budget-aligned program is a good idea or a "winning" outcome for the students whom we're supposed to want to see succeed as a nation. While the current proposal for undergraduate students turns out to not be bad in the long-term perspective, undoubtedly, the proposal works to punish those same undergraduate students should they wish to pursue advanced degrees or feel pushed into pursuing advanced degrees to stay competitive in their chosen fields or careers given the reality of globalism and the fast-paced changes in the technological landscape. It seems to me like we're moving backward in time rather than trying to meet the challenges and demands of the environment and times in which we live head-on, notwithstanding the actuality that employers already weed out job candidates based in their attainment of advanced degrees and will probably continue to do so.

Peace.
 
Trump’s Budget Would Kill a Major Student Loan Forgiveness Program, but Only for New Borrowers

As was widely expected, President Trump's new budget calls for eliminating a major student loan forgiveness program designed to help government and nonprofit workers, such as lawyers, teachers, and social workers. Those who have already taken on debt for school may not need to worry for now, however, because it appears the administration only wants to end the program for new borrowers.

The White House is proposing an overhaul of the student lending system that would streamline many of the options the government currently offers borrowers for paying down their debts. As part of those reforms, it would end the Department of Education's Public Service Loan Forgiveness program, or PSLF, which wipes borrowers' balances after they spend 10 years working either for a government or nonprofit employer. A good number of readers panicked when I wrote about this possibility last week—yes, I saw all your emails and tweets—since it wasn't clear if people currently paying their loans would be grandfathered into the program. Many, many young adults have gone deep into debt for grad school in order to pursue relatively low-paying careers in the public or nonprofit sectors on the assumption that PSLF would be around to sweep away their loans after a decade (full disclosure: my wife is one of them), and no small number have been worried that Washington might pull the rug out from under them.

Trump’s proposed budget says changes to the student loan program, including PSLF, would only apply to those who start borrowing after July 2018. (I’ve contacted the Department of Education to confirm my reading of the budget and am waiting on an answer, but the text seems pretty straightforward.)
pslf.png.CROP.original-original.png


To be clear, I am leading with the good news here because I know there are droves of people who've been freaked out that the Trump administration might scrap the program they staked their financial futures on. However, this budget is still pretty brutal on students. Aside from nixing PSLF for future generations, it ends subsidized loans for low-income students and milks an additional $76 billion from the student loan program over a decade, in part by making students pay more of the earnings each year under a revised income-based repayment plan. The changes might work OK for those who only have undergraduate loans, since they will now qualify for forgiveness after 15 years under income-based repayment, rather than the current 20. But those with graduate debt will have to spend 30 years paying back their loans before getting them forgiven, instead of 25. Given that graduate degrees are only becoming more essential in the workplace, even in lower-paid careers like teaching, it seems like a pretty raw deal for the next generation of kids on campus.

How much of this could Trump actually accomplish? The White House would need Congress' help to end PSLF or subsidized loans. But it seems possible the administration might try to restructure income-based repayment on its own, given that President Obama took unilateral action to expand the program. Beyond that, there are plenty of conservatives on Capitol Hill who would be happy to increase costs on students in the name of budget savings, and given that higher education tends be a second-tier issue in Washington, a lot of these initiatives could be slipped quietly into larger bills. Without an outcry, I wouldn't be surprised to see some of these plans become a reality.

I don't think this budget-aligned program is a good idea or a "winning" outcome for the students whom we're supposed to want to see succeed as a nation. While the current proposal for undergraduate students turns out to not be bad in the long-term perspective, undoubtedly, the proposal works to punish those same undergraduate students should they wish to pursue advanced degrees or feel pushed into pursuing advanced degrees to stay competitive in their chosen fields or careers given the reality of globalism and the fast-paced changes in the technological landscape. It seems to me like we're moving backward in time rather than trying to meet the challenges and demands of the environment and times in which we live head-on, notwithstanding the actuality that employers already weed out job candidates based in their attainment of advanced degrees and will probably continue to do so.

Peace.

In the UK, the push was on attaining a University Degree; any one.
This meant an unemployed person with no education became an unemployed person with an education.
Now we are focusing more on Apprenticeships since we are importing practical skills from abroad where someone who went to University only had on the job experience.
 
I suspect the new borrowers bit is to avoid the legal troubles that would come from trying to change existing agreements.
 
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