Ivy League institutions are the top universities in the world. However, such a high education chance comes with a high price. Therefore, 70% students who graduate these institutions are going away with a diploma and an average of $70,000 debt. However, this situation turned into a huge hole in the American economy. The Bush administration was the one that proposed a student loan forgiveness solution. However, Trump has other plans.
The Student Loan Forgiveness Started with Bush Administration
The current situation claims that there are 43 million Americans who owe the state $1.3 trillion for their student loans. This represents a serious drag on the national economy that can degenerate in a worse state if left unattended.
In 2007, President George W. Bush signed a law that allocated billions of dollars to support student loan forgiveness. Since then more than half-million Americans signed up for this program. Not only that, but they build their professional and personal lives around this opportunity.
The 2018 Budget Intends to Slash $10.6 Billion Student Aid
However, there were many signs that suggested that the Trump administration intends to shut this program down. There is proof even in the 2018 budget that the White House proposed. By slashing the student loan forgiveness, the government spares $10.6 billion.
The main perk of becoming eligible for federal student loans is that students end up paying based on their revenue. As a consequence, they need to redirect a percentage of their salary to cover their student loans. However, after up to 25 years of payments, the government spares them from covering the remains as well.
Nonetheless, citizens have to fill in some paperwork regarding their income each year. Even though this seems as simple step, a 2015 report showed otherwise. There were more than half borrowers who failed to report their income numbers annually. As a consequence, the government readjusts the amount of interest. This way, the debt numbers reach ample magnitudes.
However, Trump administration sees a lack of student loan forgiveness as a method to revive a sustainable path through the stranded American economy. On the other hand, most analysts perceive the forgiveness program as full of errors. In the end, borrowers end up paying the full amount they owe. The only perk is an extended amount of time to perform the due payments.
Image source: 1