Changes to expect to student loan legislation in 2019
Updated on September 23, 2019
The current administration is considering some changes in how student loans work in the US. These changes could affect student loan forgiveness, repayments, and give more control to private companies.
Private and Federal student loans are governed by several laws, including:
• Higher Education Opportunity Act of 2008
• Student Aid and Fiscal Responsibility Act of 2010
• Tax Cuts and Jobs Act of 2017
These laws affect how borrowers take out loans and repay them. Here are some potential changes that are worth watching out for.
1. Discontinuation of student loan forgiveness
The Trump administration has proposed bills to eliminate student loan forgiveness. The program is of great benefit to students that work in public service as their debts can be canceled after making ten years of income-based repayments.
This means new loan borrowers that choose to work in the government are out of luck in case this change takes effect.
2. A change in student loan repayment plans
You have several options when it comes to student loan repayments such as income-driven repayment and extra student loan repayments. The Trump administration has proposed to combine the current repayment plans (PAYE and REPAYE) into a single plan.
Borrowers will have to pay more of their post-tax income, which means they receive less of their paycheck. This change also affects loan forgiveness, as it will reduce from 20 years of making income driven payments to 15 years.
3. Private loan lenders
The federal government currently provides all federal student loans. The Trump administration wants to change this by increasing the role of private companies in student loans. Banks and other financial sectors could issue out federal loans in the future.
With this new competition, borrowers could get low-interest rates and better customer services. Private financial sectors also stand to reap a lot of profits from issuing out student loans.
Student Loanify is here to make student loans easy for you. We provide borrowers with step-by-step guides on student loan options and repayment plans.
Student Loanify is happy to answer all the questions you have and determine what loans you are eligible for. Contact us today for more information on student loans.