The president’s administration recently released his proposed education budget plans, and though Congress has yet to accept or deny the proposal, people on all sides are talking about the implications of the plan.
In addition to the proposed elimination of the Public Student Loan Forgiveness programs (PSLF), the budget also calls for raising the limits on student borrowers’ payments for the Income-Driven Repayment program.
What is the Income-Driven Repayment Program?
In short, this program bases the repayment of federal student loans on the borrower’s monthly income after graduation. Currently, the program has students dedicating 10% of their monthly income towards repaying their federal student loans. Undergraduate students, under the current rules, would repay their loans over the course of 20 years. For graduate students, 25 years. After such a time, the remaining loans—if any—would be forgiven.
How Does the Budget Proposal Affect the Program?
The proposal suggests the following changes: Increasing the monthly percentage from 10% to 12.5%. The budget would decrease the number of years undergraduates had to repay their federal student loans from 20 to only 15 years. However, graduate borrowers had an increase—from 25 years up to 30.
Again, the budget has not yet been accepted by Congress nor been put into effect. This is merely a report on what the budget proposes. Additionally, this budget would only affect federal student loans, not private loans.
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