We knew it was coming. Since the start of President Trump’s presidency, we wrote that he had his eye on the student loan forgiveness program. He attempted in 2017’s budget to wipe out the program but made a compromise to keep it. Now, in 2020, it looks to be getting the ax as part of a massive cut in education spending.
Trump’s 2020 budget includes $60 billion for the Department of Education. That’s 10% less than last year’s budget for the department. In all, Trump hopes to cut $7.1 billion. The student loan forgiveness program will be one of those cuts. While on its face this looks like a very bad thing, Trump has several goals in mind.
The first is his desire for more fiscal discipline. The U.S. is already $21 trillion in debt. $1.53 trillion of that is student loan debt. This is debt that people take on for themselves to better their lives. Yet, it’s expected that the government pays this debt? In the eyes of the president, it’s wholly unfair.
That leads to Trump’s second goal, which is being fair to taxpayers. He wants to create a better student loan forgiveness program that bridges the needs of students and taxpayers alike. Once again, it’s unfair to expect taxpayers to carry the student loan burden. Don’t worry though, Trump still has a plan for making college affordable.
Is Student Loan Forgiveness Truly Gone?
The budget has to be passed by the Congress and Senate. It may not pass, considering the president is still pushing for money for the border wall. That’s an issue Congress refuses to allow Trump a victory on. They will undoubtedly vote down Trump’s proposed budget. That’s where negotiations and compromises will take place to get a new budget passed.
What that looks like for student loan forgiveness programs is unknown at this time. It could very well be on its way out. If not now, at some point, Trump will get what he wants. And what he wants is the end of student loan forgiveness. In particular, the Public Service Loan Forgiveness Program.
Created by President George W. Bush, this gives public service workers a chance to be debt free in ten years. They have to fulfill a variety of requirements to do so. The problem is, the student loan debt problem back during his administration was nowhere near as bad as today. It’s becoming a massive burden on taxpayers.
Saving the Government Money
Whether you agree with Trump’s proposal or not, his rationale is in-line with wanting to save money. He has proposed cutting back other programs as well. But saving the government money could really hurt the number of people doing public service work. Many people take on these jobs because they receive student loan forgiveness.
This means we can see a decrease in the number of first responders, public defenders, police officers, nurses, and even military going to service. It’s unknown whether this would change anyone’s career path for the future. Still many may decide to go down a path where they won’t incur as much debt.
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Trump’s plan also includes carving down the number of repayment programs to one. He hopes this will simplify choices for borrowers. Many people get into the wrong repayment program because there are so many to choose from. And lenders haven’t been as forthcoming about making sure borrowers get into the right program.
Impact to You
If you have student loan debt, how will this new proposal impact you? In truth, it’s unknown whether this budget will be passed. But at the end of the day, your chance is right now to be grandfathered into the program. If you hoped to apply for student loan forgiveness, your chances to do so are closing fast.
Contact Financial Helpers today to learn whether you qualify for student loan forgiveness.
