President Trump's 2020 budget proposal calls for eliminating a loan forgiveness program for public employees and advocates other changes that could cost struggling students more.
The budget blueprint released by the White House on Monday says "streamlining and improving student loan repayment" is a priority, but includes proposals cutting several current programs and initiatives. That includes an elimination of the Public Service Loan Forgiveness program, which was created under President George W. Bush in 2007. The program forgives student loans for workers in the government and some nonprofits after they make payments for 10 years.
Under Mr. Trump's proposal, the program would no longer apply to new student loans taken out after July 1, 2020, which the White House projects would save about $53 billion over nine years.
The president's budget also suggests for additional education cuts, including:
- A reduction of $7.1 billion — or 10 percent — of the Education Department's budget, leaving it with $64 billion in funding.
- Restructuring income-driven repayment plans, which let borrowers repay their loans based on factors such as income and family size. There are currently a variety of plans that generally have borrowers pay between 10 and 15 percent of discretionary income. The budget calls for replacing this with a single plan, in which monthly payments are capped at 12.5 percent of income.
- Eliminating subsidized student loans, which could raise costs for borrowers.
- Undergraduate students in income-driven plans would have remaining debts forgiven after 15 years of monthly loan payments. This is five years sooner than the current plan. But graduate students would only have remaining debt forgiven after 30 years of monthly payments — which is five years later than the plan now.
The budget also asks Congress to expand Pell grants to cover short-term career-training programs. And it calls for creating a system where taxpayer-funded schools would "have skin in the game through a student loan risk-sharing program." The budget says the Trump administration would work with Congress to address those issues.
The education cuts require approval from Congress, and are unlikely to pass in a Democrat-controlled House.