Last month, the White House released its budget proposal for 2019. The 2019 budget calls for changes to how federal student loans are repaid and forgiven. These proposed changes would only affect student loans that were taken out after July 1, 2019. In addition, Congress is responsible for appropriations legislation. President Trump’s budget proposals are not automatically laws.
Many of the proposed changes to student loans mirror legislation that is currently under consideration by federal lawmakers. Changes mentioned in President Trump’s 2019 budget include, but are not limited to:
- PSLF would be eliminated: President Trump’s 2019 budget seeks to eliminate the Public Service Loan Forgiveness (PSLF) Program. We have written extensively about this program on our blog. Borrowers who are eligible for PSLF can apply to receive loan forgiveness for working in certain types of public service jobs and after making 120 months of consecutive payments.
- Income-driven plans would be consolidated: There are currently four income-driven repayment plans for federal student loans. IBR, ICR, PAYE and REPAYE allow you to cap monthly payments to a percentage of your discretionary income. The 2019 budget would create one universal income-driven plan that caps payments to 12.5 percent of your discretionary income. Undergraduate borrowers could have their loans forgiven after 15 years of payments. Graduate students would have to make 30 years of consecutive payments. Presently, the rules allow you to receive forgiveness after 20 years of payments if your loans were used for an undergraduate degree and 25 years for a graduate degree.
- Subsidized student loans would be eliminated: The new budget would kill off subsidized federal student loans. Subsidized loans do not accumulate interest while you are still in school. An estimated 5.7 million borrowers used subsidized loans for the 2016-2017 school year.
Follow Our Blog for Updates on Student Loan News
Federal student loans are likely to undergo changes within the next several years. You should continue following our blog for updates on legislation or executive orders that could affect your monthly payments or ability to seek loan forgiveness.
For future updates on student loan news, continue to follow The Sader Law Firm on Facebook and Twitter. If you are having problems with student loan repayment, then you could speak to one of our Kansas City student loan attorneys.