What will a Trump presidency mean for student loans? He has rarely mentioned higher education on the campaign trail, so the future is somewhat up in air.
With so much still unknown and to be worked out during the transition over the next few months, it’s too soon to know what student loan borrowers can expect. But here are a few items that could be possible priorities in the Trump presidency and Republican-controlled Congress.
During the campaign, Trump proposed slightly modifying income-based repayment for federal student loans by allowing borrowers to pay 12.5 percent of discretionary income with any remaining balance forgiven after 15 years.
Current income-based plans allow for payments of 10 to 15 percent of discretionary income and forgiven balances after 20 to 25 years. Unless the proposal is meant only for existing borrowers, it is unclear how he would carry this out since earlier in the year his campaign said he wanted to reduce or remove the government’s role in student lending.
In May, Sam Clovis, the national co-chairman and policy director of Trump’s campaign, stated that the Trump team wanted to remove the government from student lending and restore that role to private lenders. Prior to 2010, federal student loans were either originated directly by the government or they were made by private banks with the backing of the federal government.
The Trump administration has not said it would fight to remove all federal involvement from student loans, making it a system of only private loans advocate for a federally insured program similar to the previous FFEL. Either way, student loan experts thinks it would be incredibly difficult – and likely very expensive – to walk back the transition to 100 percent direct lending that’s occurred over the past six years, given that the Republicans don’t hold a filibuster-proof majority in Congress.
It is also worth mentioning here that Republican Presidents going back to the Reagan days have stated that they would like to abolish the Department of Education which would have a major affect in education in our country.
Regardless of what happens, know that College Aid Consulting Services can help you reduce the out of pocket expense for your family utilizing our 26 years of experience. Besides advising clients on FAFSA and the CSS Profile, we know many other ways to make college more affordable. Contact our office today to learn more.
