Department of Education pick

This is Part 1 of a two part series on how the Trump Administration may effect the Education and Student Loan landscape. See Education Pages Now Missing from the White House Website for Part 2.

Trump’s Early Student Loan Proposals Could Help Low-Income Borrowers

During the campaign, Trump talked about expanding the benefits of the federal loan forgiveness program for low-income student loan borrowers. In October, he proposed a plan that could make income-driven repayment plans more generous to these people. Trump plans to pay for this plan by reducing federal spending. 

Under this proposal, monthly payments would be capped at 12.5% of your income, and the remaining student loan balance would be forgiven after 15 years . The most recent income-driven plan (REPAYE) from Obama capped monthly payments at 10% with loans forgiven after 20  years of repayment. Trump’s plan would require slightly higher monthly payments, but loans would be forgiven five years earlier. 

Borrowers would be required to pay ordinary income tax on the amount forgiven with these plans. This differs from Public Service Loan Forgiveness, which forgives loans after 10 years of on-time payments (tax-free) if you work for the government or a non-profit. 

There hasn’t been any news on this since October, so we’ll have to wait and see when his plans are released. Others have speculated that he will look to reduce the federal government’s role in student lending and allow private lenders to take over a bigger chunk of new lending.

Trump’s Department of Education Choice Is Already Off to a Rocky Start

The Trump administration surprised many when he nominated Betsy DeVos as the Secretary of Education. DeVos (who is married to Dick DeVos, the heir of multi-level marketing company Amway) never attended public school and has no experience in public education, let alone in defining its policy. This is a big deal for someone who will be handling a $1.3 trillion federal student loan portfolio. Some Trump supporters view his nominations of inexperienced people to cabinet positions as providing a fresh perspective; however, many were surprised that the Education nominee didn’t seem to prepare for her confirmation hearing.

An example of DeVos’s lack of preparedness surfaced when she didn’t seem to understand the Growth vs. Proficiency debate in education policy.  The debate centers around whether schools should be measured on Proficiency (students hitting a certain benchmark on test scores) or Growth (a student’s improvement throughout the school year). See the video below for her response when asked this question by Minnesota Senator Al Franken.


Trump and DeVos seem to support “school choice” to push more people into private education. In theory, this could allow children from low-income areas to use federal money to attend a private or charter school. However, critics say that this type of program would also take money away from teacher pay in public schools and likely wouldn’t provide equal education opportunities for all American citizens.

Student Loan Borrowers Have Resources to Manage Their Loans

The Federal Student Aid Resources and pages provide information on filling out the FAFSA, preparing for college, and the basics of taking out and repaying federal student loans. Use your FSA ID to log in to the National Student Loan Data System to see all of your federal student loans in one place.  This program is one of the ways the Obama administration tried to make it easier for student to track and repay their student loans. However, borrowers still need to be vigilant as loan servicers like Navient continue to use deceptive practices.

At Student Loans Guy, we’ll keep looking out for you and provide the latest updates on college education and student loans, from both the public and private sector. Our personalized decision tool and calculators are designed to help borrowers find the best repayment plan for their situation. That could mean government programs like income driven repayment plans or public service loan forgiveness or lowering your interest rate by refinancing with a private lender. While we’ve foucsed on federal loan program in this article, the private market has also played a big role in student loan repayment with more than $15 billion refinanced with since 2012.  

What Comes Next for Student Loans and the Department of Education?

Only time will tell. The quality and afforability of US education will dictate our country’s future. In order for the United States to maintain its economic position in the world, it must continue to lead in technological innovation, the arts, and support the world’s best universities (both public and private). The federal loan program allows any person, no matter their socioeconomic background, to achieve the American Dream.

Not many know what to expect from Betsy DeVos if she is confirmed. Trump has had issues regarding Trump University, but maybe he can redeem himself by making education more affordable for the entire country. Building on the flexible repayment plans put in place by the previous administration will help more low income people attend college. Allowing the CFPB to stand up for borrowers being deceived by shady loan servicing practices and cracking down on misleading practices by for-profit universities could go a long way.

What comes next for student loans and the Department of Education? Could a Trump presidency be good for student loans? Leave your comments below.

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