By: Isaiah Silva
Many people may disagree with President Trump’s policies, but his view on student loans is similar to what a lot of students are feeling.
President Trump wants to change the way a person pays back their loan in order to get it done faster, so that person can move on with their life. The plan is to cap loan payments at 12.5 percent of your income. Then, after 15 years or monthly payments, any remaining student loan debt would be forgiven.
“Students should not be asked to pay more on the debt than they can afford, and the debt should not be an albatross around their necks for the rest of their lives,” Trump said during a campaign event in Ohio.
According to the Federal Reserve Bank of New York’s 2016 Quarter 4 “Report on Household Debt and Credit,” student loan balances were at approximately $1.3 trillion. Last year, 11 percent of the loan debt at that time was more than 90 days late.
Paying back student loans can take a long time and can halt people from making big purchases like a home, car or even having a child.
“It’s not fair and we are going to fix it.” Trump said.
As of now, the cap for payments that are based on income is at 10 percent. The payment plans go for 20 years, after that loans are forgiven. Trump’s plan will increase the amount one pays, but they will finish their payments up to 10 years faster. These plans are called PAYE, or Pay As Your Earn and REPAYE, Revised Pay As You Earn.
According to time.com, around 4 million people are enrolled in the income-based payment plan.
Some may wonder, how does allocating more of my income to student loans save me money. It saves money because the amount of time you’re paying is shorter than the current payment plan.
Taking out loans does can be scary, but there are a few benefits to taking out loans.
One of the biggest benefit to loans is that they provide financial relief when a student needs it. Using loans for school and education are the best ways to use the money.
A con to taking out loans is having to pay them back and with interest.
“Make sure you know what your balances, interest rates, and monthly payments are, and when your grace period ends,” Adam Minsky, Boston Student Lawyer said.
Staying on top of all these elements of repayment will help keep one out of financial trouble. Minsky also went on to say that you should make sure that the lender has updated contact information for you. Just because they cannot find you does not mean that your debt will disappear.
It is also helpful to find a payment plan that fits your budget.
“As your financial situation changes so can your repayment plan, and it can be changed up to once a year.” Liz Stapleton, finance blogger, said.
Student loans are a blessing and a curse. They provide students with relief, but repayment causes a lot of stress for many. It is comforting to know that we have a president that is working to help students get rid of their debt in a shorter amount of time, so they can continue with their lives.