There has been a ruckus of sorts ever since the Trump administration began. This includes a lot of Obama policies as in the case of student loan forgiveness. Apparently, news broke out that President Trump may be highly in favor of the proposed plan of new Education Secretary Betsy DeVos. The plan is yet to be voted as a law and implement, but most likely the law in question will push through. As such, this time calls for students and borrowers to be prepared.
Ever since the Trump administration began, reports reveal that not a single cent has been paid to defrauded students. This among many other signs point to the high possibility that DeVos plans will push through. First off, let’s discuss what exactly these plans are and how they will affect a lot of people.
In brief, the new Education Secretary is clearly set to completely overhaul the Obama administration’s policy. The plan is to drastically reduce the amount of loan forgiveness to be granted and the amount of time to file a claim. The plan is also set to make it harder for students to convince the authorities that they have been defrauded. The proposed plan is set to require former students to reveal clear and convincing evidence of a college’s “intent to deceive.”
Critics cannot help but bring to remembrance the $25 million lawsuits that former students of Trump University won last year. The former students claimed that the university was nothing but an expensive fraud, offering no real educational value. Moreover, critics also pointed out that the proposed policy may be difficult, if not impossible for many to meet. Critics, in particular, noted the difficulty of providing clear evidence of intent to deceive.
The proposed plan is expected to eliminate more than $700 million in Perkins Loans. Moreover, the plan may reduce the amount of work-study programs. DeVos is also planning to tax graduate tuition waivers and put an end to lifetime learning credit. In the meantime, the proposed plan may increase the allowable deduction period to 5 years. A large concern of the policy is also the removal of interest deductions for student loans beginning in 2018.
You may be wondering, so what are the options for student loan borrowers once the plan has developed and implementation begins? There are a couple of things that student loan borrowers can do. For one, the policy will shorten the forgiveness period to three years. If you default on your loans, you may want to enroll in a current Income-Driven Repayment program or perhaps a loan rehabilitation. However, the shorter forgiveness period may result in more savings in the long-term. Make sure that you speak with an expert at Credit Advisors Council, as they can help guide you to the proper decision.
Whilst in the program, ensure that you stay current on your payments. Also, check to see if you are eligible for PSLF and that your loans are in the Direct Loan Program. If necessary, don’t forget to consolidate your loans. Once you’re in the Direct Program, given that you are PSLF-eligible, don’t forget to certify your employment status as soon as possible.