Many borrowers are interested in what will be Trump’s plan for their student loans and different student loan forgiveness options. On October 13, Trump released his proposed plan for an income-based repayment plan that allows borrowers to cap their monthly payments on their income amount and the option to have their student loan forgiven after a certain period.
Under Trumps’ proposed plan, student loan borrowers may see their monthly payments capped at 12.5% of their income. After 15 years of faithful payments, it may be possible to have your remaining balance of your loans forgiven. Trump seeks to combine two of the most popular payment options into a single plan and increases the monthly cap from its current 10% to 12.5% but reduces the number of years required for loan forgiveness, which can range from five to 10 years sooner.
Trump seeks to share the risk between the federal government and the universities when it comes to students who default on their loans. He also seeks to reduce the roles of federal government in student lending but increase the role of private lenders. That is in hopes that the amount of profit that the government can produce can help encourage a reduction in interest rates for students who take out federal student loans.
1. Will I save more money under Trump’s Proposed Plan or my Current income-driven plan?
Under Trump’s current proposal, if ever enacted into law may save you more money because borrowers pay a higher interest rate, of 12.5% but for a shorter amount of time, 15 years. Compare to 10% for 20 to 25 years under the current plan
2.How can I apply for Student Loan Forgiveness?
It is important to know that the option exists already, and you do not need to wait for Trump’s plan to come into effect. There are multiple student loan forgiveness programs available. Ten-year programs are available if you work in public service or if you work for a non-profit organization. Loan forgiveness is also available after 20 or 25 years, depending on the program you qualify for. Immediate loan forgiveness is available if you are 100% disabled.
3. Will Trump’s new plan for student loan forgiveness mean I do not owe any more money after my student loan is forgiven?
Trump has yet to indicate his feelings on current student loan forgiveness policies. However, current plans, borrowers that work in the private sector with a student loan balance will need to pay tax on the balance. It goes from being an education debt to a tax debt. If you work in the public sector, the balance forgiven and nor is it taxed.
4. Will Trump’s plan lower my monthly student loan payment?
Trump believes that the government should not profit off student loans but has not revealed a plan whether he would lower interest rates. Still, you can still refinance or consolidate your loans or take advantage of other programs.
If you want to learn more about any proposed Trump Student loan forgiveness plans or other new changes, contact Student Debt Doctor. We can help you learn about current programs that you can take advantage of to help you better manage your debt. You don’t have to wait on Trump to make any new changes if you need help. Call us today.