Im A Public Servant What Do I Get Out Of This
Thank you for your service! If you work for a federal, state, local, or tribal government, or youre a member of the military or at certain nonprofits, you could be eligible for the Public Service Loan Forgiveness Program, which allows you to earn credit toward loan forgiveness. The administration has said its plan will make this process easier and its already relaxed the rules. Youll need to apply before Nov. 1.
‘trump University’ Trends As Trump Jr Mocked On Student Loan Forgiveness
Donald Trump Jr. was mocked online Wednesday after blasting President Joe Biden‘s student loan debt forgiveness program, prompting “Trump University” to trend on .
Trump University, the unaccredited and for-profit company founded by former President Donald Trump, shut down in 2010 and soon became the focus of multiple investigations into illegal business practices and lawsuits from former students who alleged that they were the victims of deceptive marketing techniques and fraud.
The now-defunct university, which was owned by the Trump Organization, trended Wednesday on Twitter after the former president’s son denounced the Biden administration’s plan to forgive up to $20,000 in federal student loan debts to those making under $125,000 per year.
“Why is there so much student debt?” Trump Jr. tweeted. “Because leftwing universities keep on raising tuition, while graduating kids with worthless degrees. That’s why any solution to student debt that doesn’t touch the billions of dollars sitting in the university endowments is an absolute scam!”
Why is there so much student debt? Because leftwing universities keep on raising tuition, while graduating kids with worthless degrees. That’s why any solution to student debt that doesn’t touch the billions of dollars sitting in the university endowments is an absolute scam!
Donald Trump Jr.
Conservatives Say Canceling Student Debt Is A Gift To Irresponsible Elites Liberals Say Its A Lifeline For Young People Struggling To Get Ahead
The news had just emerged that President Biden was moving toward canceling at least some student loan debt, and Donald Trump Jr., in the final days of campaigning for U.S. Senate candidate J.D. Vance in Ohio last month, did not mince words as he excoriated the idea at rallies.
Biden essentially wants blue-collar workers like truck drivers who didnt have the luxury of going to college to get drunk for four years to bail out a bunch of upper-middle-class kids who chose to spend tens of thousands of dollars that they didnt have on worthless gender study degrees, Trump told The Washington Post later, elaborating on his message to voters.
Sen. Mitt Romney , a more moderate Republican, jumped in as well, suggesting the move was little more than a political payout to win votes. Other bribe suggestions: Forgive auto loans? Forgive credit card debt? Forgive mortgages? he wrote on social media.
With Biden now moving closer to an executive order canceling some portion of student debt, Republicans are seizing on the issue to burnish their favored portrait of the two parties: Democrats, they say, champion the privileged elites, while Republicans support Americas down-to-earth workers. Its a message that reflects the turbulent, risky politics of student debt for Biden, who has expressed both support and skepticism about student loan forgiveness.
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Obama Calls For More Generous Income
In early 2010, President Obama proposed that Congress change the payments in IBR from 15 percent to 10 percent of a borrowers income and move loan forgiveness to 20 years of payments instead of 25 years.15 The proposal left all other parts of the original 2007 version of IBR intact. Congress enacted the proposal in 2010, but delayed the start date until July 1, 2014.16 Only new borrowers as of that date could receive the more generous terms. This paper refers to this plan as the current IBR program. President Obama later took executive actions to expand these terms to borrowers with loans from earlier periods.17
Lawmakers and those in the policy community who supported the changes did not lay out a rationale for why the original 2007 version of IBR, which had only just become available, was insufficient. Their justification was simply that more generous terms would make college and student loans more affordable.18
Elimination Of The Student Loan Interest Deduction
In the Tax Cuts and Jobs Act, Trump originally proposed eliminating the student loan interest deduction. While it was saved in the final bill, it doesn’t mean that Trump still wants to see it eliminated.
The student loan interest deduction provides up to $2,500 in deduction of the interest you paid on a student loan.
While this is a handy savings, it does phase out at relatively low income levels.
I believe that the student loan interest deduction is a misaligned incentive that doesn’t do anything, but does cost taxpayers money.
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Automatic Loan Forgiveness For Disabled Veterans
In August, President Trump signed a memorandum that automatically canceled the student loan debt belonging to thousands of disabled military veterans. According to the President, more than 25,000 veterans would have their student loans forgiven, and they will not have to pay federal taxes on the discharged amount.
According to military advocates, this move was a major victory for veterans. Previously, disabled veterans could have their loans discharged through Total and Permanent Disability, but the process was time-consuming and required a lot of paperwork, preventing some of them from applying. With this change, disabled veterans would automatically see their loans forgiven.
What Do I Think About Trump Student Loans
During his candidacy, Donald Trump mentioned that the student loan system was very similar to the tax system in terms of complications. To be very honest, I agreed to this point when he emphasized it. Yet, what he proposes does not look like streamlining the student loan system.
The situation is anyway quite confusing for many Americans. There are numerous forgiveness programs, as well as, repayment plans which make people undecided on what they should follow.
It is true that the simplification of all these programs into one sole forgiveness program would be nice. At least people would know that there is just one way to get their loans forgiven and would go with that. Nevertheless, I am still uncertain whether Trumps student loans plan will make the situation better for every borrower of federal student loans.
The problem with the current repayment systems is a borrower can decide on the plan he thinks is the best for him. But by time, if his financial situation changes, he can be worse off with the plan he is in. Having one sole plan is good in this regard, as well. Everybody would follow the same repayment plan and would be free of loan debt at the end of 15 years.
In short, I applauded the student loan planning by Obama, too. But that helped only a little to federal loan borrowers. I do believe Trumps student loans plan can be better in case it benefits every single borrower.
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Managing Your Student Loans During The Coronavirus Crisis
The presidential memorandum also says that borrowers who want to continue making student loan payments are allowed to do so, notwithstanding the suspension. Many borrowers have continued to pay their student loans, even after the initial suspension and 0% interest rate first went into effect. By continuing to pay your student loan bills, you can eliminate your debt sooner.
Effective date: August 8, 2020
Discontinuing The Public Service Loan Forgiveness Plan
Introduced by President George W. Bush in 2007, the PSLF program has been slated by the Trump administration for likely removal from the federal budget. The program currently rewards qualifying nonprofit and government workers who make 120 qualifying monthly payments by wiping out the borrowers remaining education debt at the end of that period.
Discontinuing the PSLF plan was first proposed for the 2018 budget. After being dropped from the final iteration, it was again included for 2019. Ending this program could deter borrowers from pursuing a career in public service, government, law enforcement, teaching, etc., instead opting for the private sector.
In March 2018, Congress allocated an additional $350 million on a first come, first serve basis for those who qualified for forgiveness in October 2017. This signals that while the future of the program might be uncertain, borrowers already enrolled may be grandfathered in if a change is made. In the current budget, the proposed changes would apply to new loans after July 1, 2019.
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Where Biden Stands On Debt Cancellation
Members of Congress have urged Biden to cancel $50,000 in debt per borrower. But the president has reiterated that if he used his authority for broad loan forgiveness, it would not be for more than $10,000 per borrower.
At a news conference on April 28, he said: “I am considering dealing with some debt reduction I am not considering $50,000 in debt reduction. But I’m in the process of taking a hard look of whether or not there will be additional debt forgiveness, and I’ll have an answer on that in the next couple of weeks.”
During a news conference on May 3, former White House spokesperson Jen Psaki said Biden was considering relief for borrowers making less than $125,000 a year, confirming speculation that any debt cancellation would likely be targeted.
No provision in Bidens 2022 budget proposal included broad student loan forgiveness. He had proposed forgiveness in the following instances during his presidential campaign:
If you attended a public college or university. Attendees of private historically Black colleges and universities and additional minority-serving institutions would also be eligible.
If you used the loans for undergraduate tuition.
If you earn less than $125,000. Bidens plan referenced a phaseout of this benefit but did not offer further details.
Since there is no formal forgiveness proposal, there are no details about which loans might be canceled.
And Don’t Forget About Dear Leader
The former president condemned the student debt relief program in a statement, saying, Joe Biden and the Radical Left Democrats have just orchestrated another election enhancing money grab, this time to the tune of $300,000,000,000 and just like I predicted, its coming right out of the pocket of the working-class Americans who are struggling the most!
I believe we know from his performance in the White House that Trump was not a fan of homework.
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Expand Pell Grant Eligibility To Students In Short
The budget would expand Pell Grant eligibility to students enrolled in high-quality, short-term programs. Currently, many postsecondary programs, such as coding boot camps or apprenticeship curriculums, are ineligible for Pell Grants because of their time and program length requirements. By expanding the Pell Grant program to cover these programs, more students could take advantage of them.
Two Changes Promised By President Trump
As a Presidential Candidate, Donald Trump promised to tackle the student loan crisis by making two major changes to federal student loan laws:
1. Replacing all existing Federal repayment plans with his new Income-Based Repayment Plan , which will limit monthly payments to 12.5% of income
2. Offering total Federal student loan forgiveness after 15 years worth of payments are made
President Trump said that hell be able to raise the money to pay for these increased Federal costs by decreasing Federal spending in Education and other areas, but no details have yet emerged to show precisely how that would be done.
Also, Id like to note that there would likely be some Federal savings made by removing the excellent Public Service Loan Forgiveness Program benefit, which will cost the Federal Government many millions of dollars each year by offering complete student loan forgiveness after just 10 years worth of payments are made, but that I disagree with the idea of removing this program because PSLF truly is the gold standard of student loan forgiveness programs, and the model that all forgiveness programs should emulate.
In fact, I would absolutely hate to see the Public Service Loan Forgiveness plan cancelled, especially because so many people have chosen to take out absolutely massive student loan debts to attend very expensive colleges and universities on the promise that their debt would be cancelled after theyd made 10 years worth of payments.
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‘forgiving’ Student Loans Isn’t Motivated By Kindness It’s All About Cold Hard Politics
You can be forgiven for not knowing.
With a pivotal deadline of Aug. 31, its unknown whether Biden will grant another pause in loan payments or whether hell follow through on some kind of broad forgiveness. Or both.
My sense is that the administrations management of the issue has been a total mess, says Beth Akers, a senior fellow at the American Enterprise Institute and an expert on the economics of higher education. Its creating unnecessary confusion and anxiety for borrowers.
That’s putting it mildly. Since Biden took office, the White Houses messaging on student debt has been all over the place, leaving borrowers in purgatory as to their financial future. The only conclusion is that the administration is carefully weighing the ramifications of debt leniency and that political winds are driving decisions not smart policy.
Net Effects For Graduate Students
Comparing the change in benefits for graduate students under the Trump proposal is more straightforward than for undergraduates. It is obvious that the plan reduces benefits relative to the current IBR program because it increases monthly payments by the same amount as for undergraduates, but instead of reducing the repayment period before loan forgiveness, it increases it from 20 years to 30 years. Higher monthly payments and longer terms must result in a reduction in benefits by making it far less likely a borrower would receive loan forgiveness.
We have argued that the changes lawmakers made to IBR in 2010 provided outsized benefits to graduate students relative to the original 2007 version of IBR. While it is obvious the Trump proposal rolls back those benefits, we wanted to know if it would result in a less generous program for graduate students than even the original 2007 version of IBR. That plan set payments higher than the Trump proposal but provided loan forgiveness earlier, after 25 years of payments. Therefore, we include the original 2007 version of IBR as an additional point of reference in our analysis.
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The Subsidized And Unsubsidized Loan Distinction
Congress created the federal student loan program in 1965 originally to ensure undergraduate students from low-income families had access to subsidized loans. These loans were interest-free while students were enrolled. Congress expanded the program in 1992 by providing access to loans for all students regardless of financial need.6 However, because these newly-eligible students were not in need, they would not qualify for the interest-free benefit, which was costly for the government. Accrued interest would be added to their loan balances upon leaving school. Low-income students and those attending expensive colleges would, however, maintain eligibility for the interest-free benefit. To differentiate the loan types, lawmakers called the new loans Unsubsidized Stafford and the original loans with the interest-free benefit, Subsidized Stafford.
Dependent and independent undergraduates are also subject to lifetime borrowing limits for both loan types. The lifetime limit for Subsidized Stafford loans is $23,000. For dependent undergraduates the lifetime limit for both loan types combined is $31,000. The limit is $57,500 for independent undergraduates.
Student Loans: What Happens Next
Biden is considering wide-scale student loan forgiveness and could announce his decision within weeks. That said, there is no guarantee that Biden will cancel student loans or who will qualify for Biden student loan forgiveness. Progressive Democrats in Congress, who have been pressuring the president to cancel student loans, have championed wide-scale student loan relief. They argue student loan forgiveness will stimulate the economy, reduce disparities, and help borrowers get married, start a family, buy a home and save for retirement. That said, student loan forgiveness could mean the end of student loan relief. If Biden cancels student loans, you should also expect limits on student loan forgiveness. For example, Biden could restrict student loan relief only to federal student loans, college student loans, or both. To qualify, student loan borrowers also could face a maximum income requirement, which could exclude millions of student loan borrowers.
With the end of temporary student loan relief approaching, make sure you have a clear strategy to pay off student loans. Start now so you understand all your options for student loan repayment. Here are some of the best ways to pay off student loans faster:
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