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Spending Plan to Affect Students

Trump’s new spending plan means big changes for college students.

Changes+affecting+college+students+in+debt+in+Trumps+new+plan.
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Spending Plan to Affect Students

Changes affecting college students in debt in Trumps new plan.

Changes affecting college students in debt in Trumps new plan.

Florida Golf Coast

Changes affecting college students in debt in Trumps new plan.

Florida Golf Coast

Florida Golf Coast

Changes affecting college students in debt in Trumps new plan.

Anthony Karambelas, Staff Reporter

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The king of “debt” is deepening his ditch. Trump’s $4.4 trillion spending budget is projected to add $7 trillion in debt over the next ten years. So, where exactly is the money going?

One thing is definite: the EPA, Medicare, food stamps and other domestic agencies are taking massive hits. And so are students.

Under the new budget, subsidized loans are scrapped, which means students will unwillingly rack up interest on federal student loans regardless of their income. Generally, the U.S. Department of Education pays for all interest on subsidized loans for the duration of a student’s college career. Students are also offered a six month grace period following graduation to begin paying off their loans.

Now, students will be forced to take out unsubsidized loans, which accumulate in interest from the start of college until graduation.

Income-Driven Repayment Plans are also being reformed, or rather dissolved into one option. In contrast to previous plans such as Pay As You Earn (PAYE)–which determine monthly payments based on a student’s discretionary income–Trump’s new plan proposes a 12.5 percent monthly payment rate for all students. On average, students pay 10 percent monthly for their loans.

On a brighter note, loan forgiveness will come sooner. While previous programs required twenty years of qualifying payments before loan forgiveness, the new budget requires only fifteen years. More money, less time.

Graduate students will suffer the most, with loan forgiveness coming only after thirty years of qualifying payments.

Also, plan to say farewell to the Public Service Loan Forgiveness Program. Currently, this program grants a reprieve to students working in public service positions after ten years of on-time payments. Eliminating this program means less of an incentive for students to pursue degrees in the public service field.

Most current program recipients earn less than $50,000 annually. Tack on accruing debt and this will inevitably take a toll on students.

Pell Grants are also eroding against inflation, with no money allocated towards increasing the maximum award. Instead, Trump’s budget proposes new short-term training programs, to which Pell Grant money can be allocated. The Department of Education has yet to test these programs.

In addition, opportunities for low-income students are threatened. The Supplemental Educational Opportunity Grant (SEOG)–80 percent of which goes toward independent students families living on $30,000 or less annually–will be phased out. In addition, work-study opportunities are being reduced, with a $483 million cut being made.

Trump’s budget awaits on approval from Congress and is projected for severe amendments.

Proponents of Trump’s plan argue it actually benefits undergraduate students by decreasing the amount of time needed to pay off loans, but increasing the percentage of discretionary income they must pay.

“The net effect is a significant reduction in a borrower’s total payments over the life of the loan, which is why the president would limit this new benefit to undergraduates,” The National Review’s Jason Delisle wrote.

But that leaves graduate students on the hook to make up some of the savings. “To offset the cost of this more generous program, graduate students would also have to make the higher monthly payments and would not qualify for loan forgiveness until they had reached 30 years of payments, up from 20,” he wrote.

Senator Elizabeth Warren, a Massachusetts Democrat, has made oversight of student loan servicers a top priority. Along with Senator Bernie Sanders, a Vermont Independent, she’s pushed for federal money to be spent on addressing eligibility issues for borrowers who expected to qualify for the Public Service Loan Forgiveness program but did not, she said, because of poor servicing and other bureaucratic obstacles.

“Congress promised nurses, teachers, police officers and other public servants a future without crushing student loans. Bad loan servicing, program technicalities and bureaucratic nonsense are no excuse for going back on our commitment,” Warren said in a written statement. “I’m going to keep working to make sure funding I fought for in the budget is used to honor that promise.”

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