President Trump’s First 100 Days: Student Loan Edition

donald trump student loans

Candidates make a lot of promises when running for office and President Donald Trump was no different. He laid out his vision for the future of America, including a plan to tackle the student loan debt crisis.

Tackling the student loan debt crisis is no small feat. Currently, there are 44.2 million Americans with student loan debt, totaling $1.41 trillion. The next economic crisis could burst the student loan bubble. In fact, the New York Fed has already sounded the alarm over mounting delinquencies.

As we approach President Trump’s 100th day in office, what steps has he taken to address student loans and what might be next?

Campaign promise: Cap income-based repayment at 12.5 percent

Right now, 10 percent of discretionary income is the cap for student loan payments under Income-Based Repayment. Trump’s plan proposes raising the cap to 12.5 percent, which would potentially raise your monthly payment under an income-based plan.

Status: So far, there has been no movement toward making this change.

Campaign promise: Student loan forgiveness after 15 years

Current income-driven repayment programs offer loan forgiveness after 20 or 25 years, depending on the specific plan. With Trump’s plan, forgiveness would come after 15 years for all federal loan borrowers. So even with the higher cap on payments, borrowers could come out ahead with earlier forgiveness.

Status: As of now, nothing has been done to change student loan forgiveness terms.

Administration action: Higher fees on defaulted student loan debt

In March, Betsy DeVos, the Secretary of Education, reversed a rule limiting the fees debt collectors could charge on defaulted student loan debt.

Under an Obama Administration rule, fees were capped at 16 percent of the balance. With this rule overturned, collectors can charge up to 40 percent of the balance. This could exacerbate the student loan debt crisis by increasing the amount of debt owed by already-struggling grads.

Administration action: Rollback on lender rules

Earlier this month, DeVos issued another rollback of rules from the Obama Administration. These rules required the Federal Student Aid office to take into account lender practices when renewing contracts. Student loan servicers were supposed to move toward greater transparency, inform borrowers of lower-cost options, and provide better customer service.

Now, there are no longer these contingencies placed on servicers, even as complaints against lenders are on the rise.

What’s next for Public Service Loan Forgiveness?

In October, the first of the Public Service Loan Forgiveness (PSLF) program recipients will apply for their discharges. The program is for those willing to work in government, non-profit, or other qualifying public service jobs for 10 years while making consistent payments on federal student loans.

This program is not something Trump has addressed directly. However, the Department of Education recently expressed its position that PSLF letters issued by FedLoan are not binding; it could rescind initial certification for an employer. Retroactive denial of payments made under the program is another possibility.

So far, the program hasn’t been repealed, though there is no guarantee the program is safe. PSLF is potentially very expensive. We won’t know exactly how things will go until October 2017, when the first of the program’s recipients can apply for forgiveness.

What can you do about your student loan debt?

At this point, the Trump Administration has yet to make the student loan debt crisis a high priority. Instead, the administration has focused on healthcare and tax reform. This week, the focus is on the budget negotiations to keep the government running.

Many borrowers would like to see an end to the student loan crisis with debt forgiveness and a federal student loan refinancing program. For now, however, you probably need to forge ahead on your own.

If you are worried about lowering your payments, you can still apply for consolidation and income-driven repayment. It’s also possible to apply for student loan refinancing with a private company.

Know your options when it comes to student loan debt. The more you know, the more likely you are to make an effective and efficient student loan debt repayment plan that works for you.

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