In the aftermath of President Trump’s budget proposal this week, an interesting debate has cropped up in the Twittersphere and elsewhere around whether undergraduates might actually be receiving a sneakily good deal were the budget to be enacted into law.
In essence, because President Trump has proposed lowering the forgiveness term on income-driven repayment plans for student loans from 20 years to 15 years, some students who have low enough incomes for almost two decades would see their loans wiped away sooner than they would have under current law (though the new proposal does raise the percentage students have to pay monthly from 10 percent of discretionary income to 12.5 percent). Meanwhile, students who go to graduate school would see their loan repayment term extend from 25 to 30 years while also increasing their monthly payment, unquestionably making this budget unfriendly to those seeking professional degrees.
But let’s stick with undergraduates for a moment. Is President Trump’s budget showing surprising mercy for today’s (and tomorrow’s) college students? Let’s check the tale of the tape.
On one hand, as mentioned, a student borrowing for an associate or bachelor’s degree would see her loans forgiven after 15 years, provided she recertifies every year, always makes on-time payments, smoothly navigates the relationship with her loan servicer, and has a consistently low enough income for that period of time. The budget would also allow her to use her Pell Grant in the summer, though that provision was already enacted by Congress earlier this year.
On the other hand, her Pell Grant would remain flat and not increase with inflation, further devaluing it relative to the rising price of college. She would also now see interest accrue on her no-longer subsidized student loan well before she started repaying, see her chance of getting Federal Work Study cut in half, and find her chance of getting a Supplemental Education Opportunity Grant or Perkins Loan, both targeted toward working-class students, eliminated entirely.
Maybe our hypothetical student is an adult returning to school or trying technical training for the first time. After all, 47 percent of college students are 22 or older, and 51 percent are financially independent from their parents. And President Trump has repeatedly paid lip service to the struggling working class, promising to never leave them behind, so maybe she’s in better shape here.
Sadly, her state could no longer receive federal career and technical education grants, which have been targeted for elimination. And good luck finding job training programs provided by the Workforce Innovation and Opportunity Act (WIOA)—those have been cut by 40 percent.
Perhaps she has a child of her own, like 28 percent of today’s students. In that case, she’s less likely to attend a college that provides childcare on campus, since the Child Care Access Means Parents in School (CCAMPIS) program would be zeroed out. Cuts to the Children’s Health Insurance Program (CHIP) also won’t help if her kid gets sick.
Maybe she’s one of the nearly 25 percent of independent college students who receive means-tested public benefits of some sort:
Public 2-Year or Below
Private 2-Year or Below
The massive cuts to Medicaid will make it harder to get insurance. Too bad too, since access to Medicaid tends to lead to greater college attendance and more bachelor’s degrees. Hopefully she’s not also among the nearly half of all community college students experiencing food insecurity. If so, the 25 percent cut to SNAP food assistance programs might make it a bit harder to fully engage in academics, and might force her to work more hours or take on more debt while in school in order to put food on the table.
After school, there’s no luck for her either if she plans on serving her country in the government or non-profit sector. AmeriCorps would be gone, as would the chance to receive federal funding for international exchange programs. Public Service Loan Forgiveness (PSLF), passed during the Bush administration, would be gone. Sure, PSLF might have benefited her more if she received a graduate degree, but now that it’s on the chopping block and any new graduate loans would mean a potential 30-year time horizon of repayment, she’s rethinking her further educational ambitions. The road to an undergraduate degree was risky enough.
So yes, maybe in 2033, she’ll be grateful to President Trump for potentially lopping 5 years off of the repayment term for loans she took out in undergrad. The trouble, you might notice, is getting to that point.