What does Donald Trump believe about your student loans?
Here’s what you need to know.
The presidential election is days away, and it’s important that you understand what Trump’s potential re-election could mean for your student loans. Let’s separate the facts from fiction.
Cancel student loan debt
- There have been many proposals in Congress to cancel student loan debt.
- Trump does not support these plans to cancel student loan debt for all student loan borrowers.
- Similarly, U.S. Secretary of Education Betsy DeVos doesn’t support widespread student loan debt cancellation.
- Could Trump cancel student loan debt? It’s unlikely in a potential second term. However, there’s always the potential for a policy change.
Student Loan Forgiveness
- Trump supports student loan forgiveness.
- While Trump doesn’t support immediate, widespread student loan debt cancellation, Trump supports student loan forgiveness through income-driven repayment plans.
- Trump proposed simplifying multiple income-driven repayment plans to a single plan that would reduce bureaucracy, complexity and confusion.
- Trump wants undergraduate borrowers to receive student loan forgiveness in 15 years (rather than 20 years).
- Trump wants graduate borrowers to receive student loan forgiveness in 30 years (rather than 30 years).
- In exchange for earlier student loan forgiveness, student loan borrowers would pay 12.5% of discretionary income (compared to 10% currently).
- Trump does not support “free college.”
- Sen. Elizabeth Warren (D-MA) and Sen. Bernie Sanders (I-VT) were early supporters of tuition-free college.
- However, congressional Republicans and Trump have not supported these policy proposals.
Public Service Loan Forgiveness
- Trump proposed to eliminate the Public Service Loan Forgiveness program.
- Trump believes that student loan forgiveness should be available under income-driven repayment plans.
Student Loan Relief
- Trump took unprecedented executive action this year to provide student loan relief.
- Through executive action, and later in concert with Congress, Trump provided economic relief to student loan borrowers with federal student loans such as Direct Loans.
- Trump temporarily paused federal student loan payments.
- Trump also temporarily set interest rates for federal student loans to 0% so that no new interest accrued during this period.
- Trump also halted student loan debt collection for federal student loans in default.
- Congress incorporated this student loan relief into the Cares Act, which is the $2.2 trillion stimulus package that Congress passed in March.
- Trump extended this student loan relief through December 31, 2020.
Other Student Loan Proposals
Other student loan proposals include ending subsidized federal student loans and capping the amount of certain student loans that you can borrow.
End Subsidized Student Loans
- Trump proposed to end subsidized federal student loans.
- Subsidized student loans don’t accrue interest while you’re enrolled in school.
- If subsidized federal student loans are eliminated, then you would borrow unsubsidized student loans, which begin to accrue interest after disbursement.
Cap student loans
- Trump proposed to cap the amount of federal PLUS Loans, which parents can borrow for their dependent children and borrowers can borrow for graduate school.
- Trump would limit the amount of PLUS Loans to $50,000 per year and $100,000 total.
- Trump would limit the amount of Parent PLUS Loans to $26,500.
- The rationale to limit the amount of student loans is to limit the amount of student loan debt that a borrower can assume.
Will Trump cancel student loans?
- Will Trump cancel student loans?
- Trump and DeVos oppose immediate student loan forgiveness.
- Republicans in Congress don’t support plans for widespread student loan forgiveness.
- Warren and Senate Minority Leader Chuck Schumer (D-NY) proposed that Trump be granted authority from Congress to cancel up to $50,000 of student loans for all borrowers.
- Congress hasn’t passed this legislation, or any legislation, to cancel student loans.
Pay off student loans
No matter who wins the presidential election, it’s important that you have a clear plan to pay off student loans. Here are good places to start, all of which have no fees: