President Donald Trump has unveiled his 2018 budget, and students (and their parents) might want to pay attention. The proposed spending plan includes big changes to federal student loans and other programs that help people pay for college. Among the suggested changes? Killing a big loan forgiveness program, tweaking loan terms, and slashing funding for work-study.
The cost-cutting measures are designed to save the government money. But what about students themselves? Will they benefit, or are they going to get a raw deal? At this point, it’s hard to say. The budget is in its early stages. What passes Congress will likely look significantly different than what the president has outlined.
Nonetheless, the suggested changes offer a glimpse into Trump’s vision for college funding and access. And they come alongside some other shifts in the student loan landscape that don’t require the OK of Congress, such as a simplified approach to loan servicing. From streamlined repayment plans to ending certain loan forgiveness programs, here are 12 ways Trump wants to change how you pay for school — and pay back what you owe.
1. The government would no longer pay interest on certain loans
Students would have to say goodbye to subsidized Stafford loans if Trump’s budget passes. Ending the practice of paying the interest on some student loans for undergraduate students while they are still in school would save the government more than $1 billion, according to The Associated Press. But students who lose the subsidized benefit would graduate with slightly more debt — an extra $2,300 on average, Nate Matherson, CEO of LendEDU, told The Cheat Sheet.
Taxpayers would save as a result of the change, Matherson said, but “it would cost students more money.” “If students do lose the subsidized loan benefit, then we just encourage them to pay their interest as it accumulates instead of waiting and having interest on interest,” he said.
Next: Making loan repayment less confusing