March 10th, 2016
In Part One of a three-part blog series, we wrote about the tuition-free, community college proposal President Obama is looking for in his 2017 budget. In Part Two, we took a look at the Pell grant overhaul that he is seeking and the final Part Three, we dive into the hottest topic right now for the Millennial Generation along with what is being discussed on the current campaign trail, student loans.
Student loan proposals
President Obama has kept student loan program changes at the forefront of his presidency, discussing them during numerous speeches, issuing presidential memorandums on the topic and enacting many changes to the repayment system including capping all new borrowers in repayment at just 10% of their incomes.
With these changes has come a lot of confusion in regards to the amount of repayment plans that are available to students. Even aid professionals are having a difficult time keeping up in order to counsel student loan borrowers. There are currently four income driven repayment plan types, including the rather new REPAYE program that was enacted in December 2015. The new budget proposal looks to streamline all of these plans into one program to be offered to students who take their first loan after July 1st, 2017. Existing borrowers would still have access to whichever repayment plans they are eligible for today.
The budget also looks to combine the existing TEACH Grant program with a Teacher Forgiveness Loan Program to cap the amount at $25,000, up from the current $17,500 ceiling. These new benefits would stretch to those students beginning their teaching careers in 2021 in low-income school districts in order to qualify for the new maximums, with students receiving a smaller amount of loan forgiveness for less at-risk areas.
Finally, the proposed budget would cap the benefit under the Public Service Loan Forgiveness Program to $57,500. The reasoning for this is to protect students and taxpayers against institutional practices that may encourage over-borrowing.