If you are a student receiving assistance with student loans from a work study program, Public Service Loan Forgiveness program, or aided by the Perkins loan, President Trump’s recent budget cuts will hit close to home. President Trump recently submitted his first budget to Congress, and the Education sector will be seeing major budgeting and defunding of crucial student loan programs. Some of the more important changes to the coming wave of student loans that this article will focus on are:
–The cut to funding of Perkins loans for disadvantaged students.
–Elimination of the Public Service Loan Forgiveness program.
–Slashed work-study programs.
Where will that money go if not to student loan assistance? Well, the money from these programs would instead be directed toward charter schools and school choice initiatives.
Public Service Loan Forgiveness program
The Public Service Loan Forgiveness (PSLF) program would be the hardest hit. Designed to encourage college graduates to enter professions such as social work and teaching that are traditionally low-paying, the PSLF program rewards student lenders for entering these professions by forgiving the entirety of an individual’s federal student loans after ten years of payments. The amount is forgiven regardless of the total amount still owing at the end of that ten years. Unfortunately, this incentive won’t be as appealing after Trump’s Budget cuts.
Currently over 552,000 individuals have registered for the PSLF program, and it is vague what the future holds for these individuals. Trump’s budget is silent on how these people should be treated. However, this change may not apply for those who have already qualified for the PSLF program. However for some fortunate individuals, they may still have the opportunity to be grandfathered into the program allowing their federal loans to be forgiven after ten years. Others, just starting their public service jobs, would not be able to get their federal student loans forgiven. In summary, the result of eliminating the Public Service Loan Forgiveness program means a growing amount of student loan debt for former students and less incentive for public service work.
Perkins loans for disadvantaged students and Work Study programs
It is unfortunate that a majority of Trump’s Budget cuts target the assistance given to disadvantaged students. Many low income students were given student loan assistance through the Perkins loan, offering low interest federal loans for undergraduates and graduates with exceptional financial need. This program’s funding will be minimized in Trump’s budget cuts, meaning that student loan assistance will not be as widely available for disadvantaged students.
On top of slashed funding for Perkins Loans, work study opportunities will be even more scarce after Trump’s budget cuts. The Fewer Perkins loans and diminished work-study opportunities will force students to take out additional loans in order to complete their schooling. While some students will take out more federal student loans than others, many students will be driven toward private student loans. With higher interest rates and few, if any, future repayment options, private student loans are, simply put, a bad option. Cutting the funds for Perkins loans and the drastic decrease in work study options will inevitably increase the amount of student loans former students will have to pay. Aiding to the growth of college graduates needing help with student loans.
What to expect for future Graduates
Currently 1.4 trillion dollars is owed in student loan debt. And that is increasing at the rate of $2,667 per second. To the extent that Trump’s proposed education budget becomes law, we can expect a new and higher wave of student loans and the search for student loan forgiveness.
If you are in need of student loan legal help, set up a consultation concerning your student loan payments or student loan assistance options, and call the number above to schedule your 30 minute consultation. You must live in the state of Colorado to do so.