Even though 44 million Americans are reeling from the student debt crisis, President Trump and Betsy DeVos want to make college even more expensive.
In the Trump administration’s proposed budget for fiscal year 2019, the Department of Education’s public service loan forgiveness program would be cancelled, meaning hundreds of thousands of borrowers who willingly took lower-paying jobs in the public sector for at least ten years in order to get out of debt will be hung out to dry. This could potentially affect up to 800,000 borrowers who have submitted employer certification forms to prove to the government that they are employed in the public sector.
The budget would also bring significant changes to current income-based repayment plans, and charge students for interest on federal loans. The Washington Post estimates these changes will cost students an extra $200 billion over a ten-year period.
Initially, the first wave of borrowers who applied for public service loan forgiveness were set to have their loans forgiven in 2017, as former President George W. Bush signed the program into law in 2007. However, as the New York Times reported last March, borrowers are now suing the Department of Education, as DeVos’ agency has argued the approval letters for loan forgiveness sent to these borrowers are not legally binding, and the promise can be rescinded at any time. The four plaintiffs have even been joined by the American Bar Association.
If the Trump budget were to go into effect today, the five current income-based student loan repayment plans would become one, with the payment rate going from 10 percent of a borrower’s income to 12.5 percent, and the payment range shortening to a maximum of 15 years, with graduate students paying for 30 years, according to the Post.
These changes to federal student aid programs are coming at a time when college tuition has reached record-high levels and students nationwide are drowning in $1.4 trillion of student debt. When tracking the cost of various staples like food, healthcare, housing and education between 1978 and 2014, the Bureau of Labor Statistics found that tuition had increased by approximately 13-fold, far outpacing the increasing costs of food, healthcare and housing.
While the Trump administration and Secretary DeVos maintain they’re trying to save taxpayers’ money, a recent academic study found that forgiving student debt would provide a far greater boost to the economy than maintaining the current system. The Levy Economics Institute at Bard College calculated that forgiving all federal student debt — which makes up about 90 percent of all outstanding debt — would inject the economy with another $1 trillion over ten years, as students freed from crushing debt loads would suddenly be able to buy homes, raise children, and start businesses.
Logan Espinoza is a freelance contributor specializing in economic issues. He lives in Phoenix, Arizona with his wife and daughter. Contact him at logan DOT espinoza AT yahoo DOT com.