Trump Announces Cuts In Relief Programs For Student Loans
11 Feb 2020
Approx Reading time: 3 minutes
The student debt crisis
- In a recent budget announcement, Trump has highlighted cutbacks that would reduce support currently enjoyed by student loan borrowers.
- These include an overall cutback of around $170 billion, coming from a reduction in loan limits, elimination of loan subsidy for students in need, limited options to make loan repayments, and elimination of public service forgiveness program.
- The move is unlikely to settle well with voters, the majority of whom want greater relief in student loans from the government.
has become the headline of the upcoming elections in the US, with many lawmakers proposing a resolution that would forgive outstanding student loans for thousands of Americans. However, President Trump’s recent budget announcement has highlighted that the government would be cutting back on many relief programs that were designed to alleviate the struggles of many borrowers.
In the plan that has been announced, the Trump government has reduced its expenditure on student debt by around $170 billion. The cuts have come in the form of reduced loan limits on annual as well as lifetime loan amounts for both students and their parents, and also the elimination of subsidized loans by the government for students still in school or facing financial troubles.
The number of options at the borrower’s disposal for making repayments has also been reduced, and the public service program for loan forgiveness is also planned to be cut.
This program was initially launched in 2007 by the Republican President George W. Bush, and it had allowed employees working at not-for-profit as well as government-operated firms to file for cancellation of any outstanding student debt if they had continued making timely payments for a 10-year period. Estimates by the Consumer Financial Protection Bureau suggest that around 25% of workers in the country are eligible for this program at this time.
According to experts, these changes settle well with the Trump Administration’s image of having an anti-borrowing stance.
The proposal delivered by Trump has reduced the budget allocated to the Department of Education by around 8%, to $66.6 billion. This is still higher than the drastic cuts of 10%
that Trump had aimed to achieve for the department a year prior.
However, voters are unlikely to respond positively to cuts in student loan-related programs. Polls have highlighted that 80% of US citizens want greater relief in the student debt crisis by the US government, while 60% of all registered voters have voiced support for the cancellation of all currently outstanding student debt in the country.
In stark contrast to Trump’s current stance on student loans, Democratic candidates running for president have promised to cancel some or all of student debt in the initial days of assuming office. These include Bernie Sanders, who wants to clear all student debt at once, and Elizabeth Warren, who has a step-wise plan to cancel debt based upon household income.