400000 promised student loan forgiveness - here's why they are panicking

Ivan Schwartz
May 19, 2017

In addition to the cessation of the Public Service Loan Forgiveness program, the proposed budget also slashes or completely eliminates funding for college work-study programs, mental health services in schools, after-school programs, arts education programs, programs for gifted students, global language programs, organizations that provide childcare to parents in school, career and technical education, and Special Olympics education programs, among many others. Applying these tax return funds to your outstanding student loan debt can save you years off your repayment time. As promised in the "skinny budget", the Federal Supplemental Educational Opportunity Grant would be eliminated, while TRIO and Gear Up programs, which help disadvantaged students in middle and high schools prepare for college, would sustain almost $200million in cuts. Congress would have to approve the department's proposed changes for them to take effect.

A request for comment from the Education Department was not immediately returned.

It's unclear whether the Trump administration may propose ending the program for future graduates, or end it for those who have already applied and made qualifying payments. "It would be the equivalent of pulling the rug out from under us", said Daniel J. Crooks III, a government attorney who is expecting loan forgiveness from the public service program in six years. This move has been wholly endorsed by Education Secretary Betsy DeVos who is in favor of expanding charter schools, as well as private and religious schools. Read a Chronicle of Philanthropy article on charity workers' concerns about the state of the loan-forgiveness program. No, DeVos, a woman who admitted to having no personal experience with loans of pretty much any kind, is doing her damnedest to make sure you struggle to pay back your college loans. She praised President Trump's "skinny" blueprint budget released in March for including an additional $1.4 billion in school choice programs.

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Courtney said rising college costs are compounded by the fact that student loans often come with higher interest rates than mortgages, vehicle loans, and other forms of consumer lending which can be refinanced. But that's not all, the new plan also will make changes to the income-based repayment system.

The CFPB has received complaints from borrowers who were told they were not enrolled after years of making payments they thought counted towards the 120 needed for debt relief. Signing up for that repayment plan alone requires submitting information about your income each year - a process which can take weeks and temporarily stop the clock on your 10 years of payments. The Obama Administration had proposed capping the amount borrowers could have forgiven at $57,500, but that proposal was never approved and forgiveness remains unlimited. Close to 80 percent of borrowers who rehabilitate their debt make the minimum $5 monthly payment, according to a 2015 estimate by the National Council of Higher Education Resources, a lobbying group that represents student debt collectors and servicers. Beyond that, nobody has a really firm idea of what the program will cost-the Government Accountability Office has suggested that 25 percent of Americans work in jobs that could qualify for the program (there are a lot of government and nonprofit workers out there). The program is supposed to encourage borrowers to take lower paying jobs that benefit their communities, such as public defenders or teachers.

"For grad students, this is a lousy deal", said Ben Miller, senior director for postsecondary education at the left-leaning Center for American Progress.

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