Higher education is important to many people, but it doesn't come cheap. In order to get a college or graduate degree, many people need student loans. Of course, the hope is that once you receive a degree, you'll be able to get a job, and repay your student loans.
However, this isn't as easy as it theoretically seems. For this reason, there are various repayment options for people who take out student loans. But, under President Trump's new spending plan proposal, there are many changes to repayment options for those who owe money for federal student loans.
What Would Be Changing?
The budget plan, as currently written, would do away with the Public Service Loan Forgiveness Program and curtail income-based loan repayment plans. The plan would also cut funding for federal work study in half, and embolden the government to go after students who aren't paying their loans. These changes to student loans would apply to those students who borrow after July 1, 2019, and would not include loans provided to borrowers to finish their current education.
In regard to income-driven repayment plans, they would be reduced from four options to one option. Under the one option, a student's monthly payment wouldn't be more than 12.5% of his or her discretionary income. One positive aspect of the income-driven repayment plan under the new budget is that undergraduate students would have their loan forgiven after 15 years. For reference, these types of loans are currently forgiven after 20 years.
What Happens If You Can Repay Your Student Loans?
There are some options for those who can't pay back their student loans, and those options will vary depending on whether you have private or public loans. Under the new budget plan, people who fall into delinquency repaying their federal loans would be subject to more stringent enforcement. More specifically, the new budget plan calls to "streamline the Department of Education's ability to verify applicants' income data held by the Internal Revenue Service."
If you're concerned about repaying your student loans, or want to find out about your repayment options, it may be a good idea to speak with a local attorney.