What You Need to Know About President Trump’s Budget Proposal

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President Donald Trump unveiled his first full budget proposal on Tuesday. With it, he promises to balance the federal budget within a decade.

That claim rides on $3.6 trillion in spending cuts to various programs over the next 10 years, the most ever proposed by any president, according to the proposal. Programs on the chopping block include Medicaid, food stamps (or SNAP), Social Security Disability benefits, health care, and student loan benefits.

The budget also assumes best-case scenario economic conditions. For example, it forecasts a steady 3-percent economic growth over the next decade, which would add another $2.1 trillion in savings.

However, on May 18, the Committee for a Responsible Federal Budget said that to achieve such sustained growth “would require a heroic combination of good policy and good luck.”

Other assumptions from the proposal include a consistent 2.3 percent inflation rate and the unemployment rate capping at 4.8 percent.

The Trump budget isn’t all about cuts, however. It also calls for more spending on defense, border control, and other infrastructure investments. There’s also a proposal to create the first federally funded parental leave program.

A breakdown of the Trump budget cuts

During his campaign, President Trump pledged to leave Social Security, Medicare, and Medicaid alone. But in his budget proposal, Social Security and Medicaid, along with other safety-net programs, suffer cuts.

Medicaid

The budget proposal plans to reform Medicaid to allow states to manage their own programs. States would also have the ability to choose between a per-capita cap and a block grant from the federal government. The reform is projected to save $610 billion over 10 years.

The Children’s Health Insurance Program (CHIP) would also be cut by $5.8 billion over the next decade. CHIP provides health insurance coverage to children whose parents earn too much to qualify for Medicaid, but not enough to afford private health insurance.

Supplemental Nutrition Assistance Program (SNAP)

Also know as food stamps, SNAP provides assistance to low-income households. Under the Trump budget proposal, the federal government would close eligibility loopholes. It would also instate a requirement for able-bodied adults in the program to work.

The cuts could also affect the Meals on Wheels program, which provides affordable meals to the elderly. The program currently accepts SNAP for payment. The proposal estimates the savings from these changes to be around $191 billion over 10 years.

Social Security Disability Insurance (SSDI)

Citing a low labor force participation of 20 percent among people with disabilities, the Trump budget proposal seeks to increase that participation rate.

While vague on the details, the plan will seek to dispel the expectation that receiving disability benefits means a permanent exit from the workforce. Through early intervention, return-to-work initiatives, the proposal hopes to decrease the need for disability insurance.

Through this reform of the SSDI program, Trump hopes to save $72.4 billion over 10 years.

Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)

Under the budget proposal, only those who are authorized to work in the United States would be allowed to receive the EITC and CTC. Under the current law, a Social Security Number valid for work is not required.

Trump estimates this would save the federal government $40.4 billion over the next decade.

Temporary Assistance for Needy Families (TANF)

The budget proposes to reduce the block grant the federal government provides to states for the TANF program by 10 percent. It would also eliminate the TANF Contingency Fund that states could draw upon during times of economic distress.

These cuts would result in $21.6 billion in savings over 10 years.

Student loans

The Trump budget plan proposes a complete overhaul of the federal student loan program. Initiatives include eliminating subsidized student loans, getting rid of the Public Student Loan Forgiveness Program, and creating a single income-driven repayment plan.

These initiatives would save $143 billion over the next decade, according to the proposal.

Other notable Trump budget cuts include limiting farm subsidies ($38 billion), establishing new solvency standards for unemployment insurance ($12.9 billion), and spending cuts to several government agencies.

A breakdown of spending in the Trump budget

While President Trump’s main goal is to cut back on what he considers unnecessary spending, he also makes a case in his budget proposal for new spending.

Public and private infrastructure investment

Most of the new spending proposed over the next decade is to support $1 trillion in private and public infrastructure investment. The budget plans to allocate $200 billion over the next decade in this endeavor.

Parental leave program

Following up on a campaign promise, President Trump proposes a parental leave program to help new parents adjust after the birth of a child. With the budget, the federal government would provide six weeks of paid leave for new parents, including adoptive parents.

This new program would cost $19 billion over the next 10 years, according to the proposal, but could help parents struggling with student debt.

Another notable investment includes $2.6 billion to put toward “funding to plan, design, and construct a physical wall along the southern border” of the United States.

Trump budget also calls for tax reform

The budget proposal also calls for various tax cuts and reforms, including:

  • A lower individual income tax rate
  • A higher standard deduction
  • Repealing the 3.8 percent surcharge on capital gains and dividends established through the Affordable Care Act
  • Ending the alternative minimum tax
  • Abolishing the estate tax
  • Reducing corporate tax rates
  • Eliminating special interest tax breaks

Congress unlikely to approve budget as-is

President Trump’s budget proposal calls for a massive rethinking of how the government spends its money. However, some Republican lawmakers may not be on board with the proposal.

In the week leading up to the budget announcement, Senate Majority Leader Mitch McConnell said in an interview with Bloomberg that the president’s priorities “aren’t necessarily ours.”

Other senators, including Senator John McCain and Senator John Cornyn, have declared the budget dead on arrival. According to Cornyn, though, this declaration isn’t necessarily a reflection of the contents of the budget.

“Almost every president’s budget proposal is basically dead on arrival, including President Obama’s,” Cornyn said in an interview with NBC News. He added that such proposals are more a wish list than legislation.

Still, Trump’s priorities do align with the Republican-led Congress. This could mean that spending cuts in Trump’s proposal could remain part of the conversation as Congress builds its own budget.

What’s next for Trump’s budget?

Now that President Trump has released his proposal, Congress will go to work on one of its own. It may or may not include some of the president’s priorities, but it’s very likely that Trump will use his influence to try to persuade Congress in his favor.

Once House and Senate committees hold hearings on Trump’s budget proposal, Budget committees will determine what to keep and what to leave out. Keep in mind that some of the budget proposals may change existing laws, so Congress will also need to consider those.

Once the Budget committees submit their proposal, the House and Senate will vote on it. If Senate Democrats filibuster, the budget will need at least 60 votes in the Senate to pass. If they choose the reconciliation process, however, it will only take 51 Senate votes to pass.

What Trump’s budget proposal means for you

Right now, it’s hard to say how much, if any, of Trump’s budget proposal will get through Congress. With many leading Republicans thinking that the cuts go too far, it may take time to sort out what’s probable and what isn’t.

In the meantime, avoid panic. Fortify your finances in case one or more of the major proposals get pushed through and affect you and your family.

Consider contributing to an emergency fund. Having extra cash on hand for a rainy day can make a big difference if you suddenly find yourself in a situation where you need one of the government safety nets that may get slashed.

Lastly, be proactive by calling your state’s representatives and sharing your feelings, positive or negative, about the proposed initiatives.

Interested in refinancing student loans?

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1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at hello@earnest.com, or call 888-601-2801 for more information on our student loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.


2 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance: Fixed rates from 3.46% APR (with AutoPay) to 7.61% APR (without AutoPay). Variable rates currently from 2.31% APR (with AutoPay) to 7.61% (without AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.31% APR assumes current 1 month LIBOR rate of 2.31% plus 0.75% margin minus 0.25% for AutoPay. If approved for a loan, the fixed or variable interest rate offered will depend on your credit history and the term of the loan and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

3 Important Disclosures for Figure.

Figure Disclosures

Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.


4 Important Disclosures for College Ave.

College Ave Disclosures

College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

1College Ave Refi Education loans are not currently available to residents of Maine.

2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.

3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.

4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.


5 Important Disclosures for Laurel Road.

Laurel Road Disclosures

Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

ANNUAL PERCENTAGE RATE (“APR”)
This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

FEE INFORMATION

There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.

LOAN AMOUNT

For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
For eligible Associates degrees in the healthcare field (see Eligibility & Eligible Loans section below), Lender will refinance up to $50,000 in loans for non-ParentPlus refinance loans. Note, parents who are refinancing loans taken out on behalf of a child who has obtained an associates degrees in an eligible healthcare field are not subject to the $50,000 loan maximum, refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for more information about refinancing ParentPlus loans.

ELIGIBILITY & ELIGIBLE LOANS

Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).

Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.

All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.

For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.

INTEREST RATES

The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.

DISBURSEMENT OPTIONS

The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.

POSTPONING OR REDUCING PAYMENTS

After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.

We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.

We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.

If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of November 8, 2019 and is subject to change.


6 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.


7 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.


8 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.

1.99% – 6.89%1Undergrad
& Graduate

Visit Earnest

2.31% – 7.36%2Undergrad
& Graduate

Visit SoFi

2.06% – 6.81%3Undergrad
& Graduate

Visit Figure

2.62% – 6.12%4Undergrad
& Graduate

Visit College Ave

2.29% – 6.65%5Undergrad
& Graduate

Visit Laurel Road

1.99% – 7.06%6Undergrad
& Graduate

Visit Splash

1.81% – 6.29%7Undergrad
& Graduate

Visit CommonBond

1.90% – 8.59%8Undergrad
& Graduate

Visit Lendkey

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.

Published in News & Policy, Public Service Loan Forgiveness, Student Loan Forgiveness, Student Loan Repayment