Trump budget targets students

Loan programs, Pell Grants face massive overhaul

President Trump’s 2018 budget, released Tuesday, proposes dramatic changes to a few popular student loan programs.

The budget contains three main proposals — cutting back on the number of loan repayment options; eliminating the program that allows some workers in public service jobs to have their debts waived; and changes to Pell Grants, federal grants based on financial need.

These proposals would apply to loans issued on or after July 1, 2018. They would not apply to loans issued after July 1, 2018, if those loans are used to finish the borrowers’ current course of study. In other words, a college junior seeking a loan on July 1, 2018, to finish her bachelor’s would not be subject to these proposals.

Repayment plans: Of the $ 1.4 trillion of student loans outstanding, more than $ 1 trillion are federal loans issued by the Education Department. The rest are from private banks.

Borrowers of those federal loans who have difficulty coming up with the monthly payment can apply for at least one of four options in incomedriven repayment ( IDR) plans. These plans allow you to adjust your monthly payment based on your income, and they allow your debt to be forgiven if you make monthly payments consistently for a required number of years. Terms of the four plans vary. But generally, the lower the income, the lower the monthly payment.

Trump’s income- based repayment plan would cap a borrower’s monthly payment at 12.5% of their income.

Public service workers: One of the programs targeted in Trump’s budget is the Public Service Loan Forgiveness program, administered by the Department of Education. If you have student debt but work for a qualifying employer in public service, your debt is forgiven after 10 years of payments while working for the employer.

Pell Grants: The budget proposes cutting $ 3.9 billion from the Pell Grants reserve, according to an analysis by The Institute For College Access and Success ( TICAS), an advocacy group. Earlier this year, Congress approved a change in Pell Grants so that they could be year- round. Traditionally, the grants have been used only for nine months of study.

While making grants available year- round would mean summer school students would have greater access, cutting the program’s funds from its reserves would mean “the administration’s budget undermines Pell Grants,” TICAS says.