Personal Finance

Trump looks to kill student loan forgiveness program

Key Points
  • The Education Department's budget would be slashed under Trump's 2021 budget.
  • Cuts include the end of subsidized student loans and the popular public service loan forgiveness program.
President Donald Trump is calling for cuts to the Education Department
Nicholas Kamm/Getty Images

As student debt continues to climb, President Donald Trump on Monday released a budget for 2021 that would slash many of the programs aimed at helping borrowers.

Student loan spending would be cut by $170 billion in Trump's plan, titled "A Budget for America's Future." The reductions include "sensible annual and lifetime loan limits" for graduate students and parents and the end to subsidized loans, in which the government covers the interest for borrowers who are still in school or experiencing economic hardship.

It would also reduce the number of repayment options for borrowers and nix the popular, if challenged, public service loan forgiveness program.

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That program, signed into law by President George W. Bush in 2007, allows not-for-profit and government employees to have their federal student loans canceled after 10 years of on-time payments. The Consumer Financial Protection Bureau estimates that up to one-quarter of American workers are eligible.

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"The Trump Administration already has a reputation of being anti-borrower," said Mark Kantrowitz, a higher education policy expert. "This just takes it further."

In all, Trump's proposal would request $66.6 billion for the U.S. Department of Education, trimming the budget by $5.6 billion, or nearly 8%. The proposed cut is less steep than last year, when he called for a nearly 10% reduction in spending for the department.

Still, any cuts to student loan relief programs are unlikely to sit well with many voters.

Eighty percent of Americans agree that the government should make it easier for people with student debt to repay their loans, a study by The Pew Charitable Trusts found. Another poll found that nearly 60% of registered voters said they would support a plan to cancel all existing student loan debt.

Meanwhile, leading Democratic presidential candidates on the campaign trail are vowing to cancel the majority or all of the country's outstanding student loan debt.

Bernie Sanders has proposed wiping out the country's $1.6 trillion outstanding student loan tab.

Elizabeth Warren's plan would cancel $50,000 in student debt for borrowers with household incomes of less than $100,000. People who earn between $100,000 and $250,000 would be eligible for forgiveness on a sliding scale.

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