The US President Donald Trump has released a proposal of making some changes in the rules of higher education including student loans.
Let’s have some analysis regarding the student loan reduction proposal by Donald Trump:
Reforms on Higher Education
The President has just released a 10 point plan regarding the changes to be made in the higher education system. The administration under Trump feels that the previous rules of the Higher Education Act increased the cost of college and student loan debt. Trump’s main aim is to make education flexible, affordable and reliable for every American. Which means there will be no change proposed on scholarship offerings.
Trump’s student loan proposal aim includes:
- Provide right information to students, families and working Americans;
- Encourage creativity;
- Make sure that smart students are able to attain the right college according to their talent.
- Protecting free speech in an educational institute.
Statistics regarding Student Loan Debt
According to a recent study on loan debt statistics in America it is found that there is $1.5 trillion of student loan debt and more than 43 million borrowers. It is estimated that by 2023, 35-40% of student loan borrowers may not be able to fulfill their loans.
10 – Point Plan: Loans for Students
The 10 point plan made by Trump includes many reforms to be made in higher education. Let’s consider two of them which deals with student loans.
- Students eligible to repay loans should only be allotted with it.
The American government noticed that there are very fewer limits on colleges to limit the tuition fees. It made the parents along with their students to bear the load of loans. The government proposed in setting up some restrictions on loan borrowed by the students.
The White House called the Congress to:
- Approve Parent and Graduate PLUS loan limits.
- Help students to manage their study loans by assigning financial aid administrators.
- Regular financial aid counseling should be provided by the study institutions.
Potential Rationale: Restraint the rise of college tuition fees. Check the rise in student loan debt.
Potential Impact: If the education cost is lowered then the student will be taking fewer loans from the banks. If the parents and the students are provided with a good financial advisor then they can easily understand the true cost of student’s loan including added interests to it. It will also help them to pay the loans successfully.
- Make the student’s loan aid simple
Trump administration also feels that there are many loan repayment plans which confuse many peoples. Trump’s repayment plan not only aims at getting rid of these confusions but will also allow loan forgiveness to the graduate and undergraduate students. Trump’s plan is to share the income tax money among the U.S. Treasury and the U.S. Department of Education for the management of repayment plans. Previously Trump has called to eliminate the Public Service Loan Forgiveness program. He is also working to make student loan forgiveness available for all students.
Student’s loans for undergraduate:
The student will be given monthly loan and the limit is 12.5% of income. The student’s loan debt will be forgiven after 15 years of monthly payment. This option was present five years earlier for an undergraduate student.
Student’s loans for graduate:
The student will be given monthly loan and the limit is 12.5% of income. The student’s loan debt will be forgiven after 30 years of monthly payment. This option will be present five years later for graduate students.
Potential Rationale: Aims to reduce any kind of confusion among students and parents. Student loan forgiveness should be provided on the basis of graduate or undergraduate program and not on the basis of career choice.
Potential Impact:
This could save the time of the parents and students who want to take any kind of monetary assistance. Students undertaking the graduate program have to wait for loan forgiveness for a long time while those undertaking the undergraduate program have to wait for a shorter period of time. The public servant will be receiving student loan forgiveness as well. But the only thing is that they will be given this facility after 15 or 30 years, depending on the type of loan taken by the student.
Final Words
If you are willing to take any student loan then it is really important to have complete knowledge regarding, refinance of student loan , consolidation of student loan, repayment of student loan, forgiveness of student loan.