Feb 06, 2017

Donald Trump promised a lot of things to a lot of people during his controversial campaign.

Now that he is the President of the United States, it’s time to fulfill those promises. One of the groups that were promised a better future under a Trump Presidency included college students.

The student debt situation exacerbated under the Obama administration and contributed to the nation’s rising debt that’s about to reach a whopping $20 trillion. Trump vowed to get rid of many of Obama’s policies that he thought were worsening the student debt situation.

But keeping macroeconomics aside, will Trump’s student debt plan help average college students?

That is the question we need to ask here.

Trump’s proposals

The biggest change Donald Trump plans to introduce, when it comes to student loans, is that he wants to implement a redesigned version of the existing income-based repayment plan. At present, the borrowers with federal student loans usually qualify for standard 10-year replacement plans.

Trump suggested a change, however. In his policy speeches about the student loans, he vowed to cap the monthly repayments at around 12.5 percent of the borrower’s monthly repayment. Additionally, he also promised to forgive the loan after 15 years of regular repayment.

Potential benefits

If you want to know how Trump’s plans can benefit the average student borrower, you need to compare his proposed policies with the existing ones. Through that, we can see how the proposed changes impact your wallet.

Currently, the students who take out federal loans can have the repayments capped at 10-15 percent of their monthly income and receive forgiveness after 20-25 years of regular repayments. Trump’s proposal to cap the repayment at 12.5 percent of the income can provide relief to those who are paying 15 percent.

Loan forgiveness

The biggest advantage students can receive under a Trump presidency is that the loans would be forgiven after 15 years of regular repayment. This is why Trump’s student loans plan might be more preferable for you.

What about the students who were eligible for having their monthly incomes capped at 10 percent? Wouldn’t they be miffed with an increased income cap? Well, they shouldn’t. Although they’ll be paying slightly more on a monthly basis, the reduction of five years in the loan forgiveness period may still save them thousands of dollars in repayment costs.

The public perception

An important factor to consider here is how the American public perceives the effectiveness of Trump’s plans and whether or not his administration will be able to fulfill the promises they made during the campaign.

According to a survey by the Student Loan Hero, around 40 percent of the respondents believed Trump will have a negative impact on the American student debt situation. Another 41 percent suggested that the situation will remain unchanged. Only 19 percent of the respondents were optimistic about his plans.

Going forward with his student loan proposals, Trump not only needs to devise a practical solution but also needs to take the public on board as well. 

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