Administration’s First Budget Looks to Inject Market Discipline Into Student Loan Program

(from Forbes):

By Thomas K. Lindsay

President Trump’s first budget has been submitted to Congress. It would enact a number of changes in higher education policy: eliminating the taxpayer subsidy for low-income students’ loan interest payments while enrolled in school; raising the limit on borrowers’ payments under the Income-Driven Repayment program from its current 10 percent of monthly income to 12.5 percent; and reducing the number of years that these borrowers must pay the 12.5 percent monthly charge from 20 to 15 years, after which the remainder of undergraduates’ loans would be forgiven. Graduate student borrowers would be required to continue paying no less than 12.5 percent of their monthly income for 30 years, rather than the current 25.

Finally, the Trump budget would eliminate the Public Service Loan Forgiveness Plan (PSLF), a well-intentioned but counterproductive initiative of the past two administrations (George W. Bush and Barack Obama). While all of these reforms are controversial, abolition of the PSLF could prove to be the most contentious. CONTINUE READING HERE