With Trump being our newly elected president, a critical issue that comes to mind is the student loan crisis. As a recent alumnus who graduated this past May, I am acutely aware of the expense of college and currently hold student loans, which I intend to pay back. Trump and the Republicans have been notably quiet about this important issue for millions of young voters. Their silence comes at a time when several repayment plans are in limbo, but also with new talk of eliminating the Department of Education. Student loan debt is a serious burden and President Trump should be more vocal about this issue by seeking real solutions.
The Biden administration proposed a broad forgiveness plan, which was ultimately struck down by the Supreme Court. It amounted to a government handout and was going to throw billions of dollars to borrowers within a certain income threshold — a solution that is both unfair and fiscally irresponsible. This plan was unfair to those who had already paid their loans and also would have worsened the high inflation rate experienced at the time.
Currently, there are a handful of ways to receive forgiveness on federal loans for most borrowers with plans such as the Income-Contingent Repayment Plan (ICR), which has existed since 1994, capping payments to 20 percent of discretionary income and forgiving the remaining balance after 25 years of payments. Over time, more generous plans such as the Income-Based Repayment Plan (IBR), Pay As You Earn (PAYE), and lastly Saving on a Valuable Education (SAVE) would be introduced requiring less of one’s discretionary income. The legality of SAVE and potentially other plans are currently being decided in the courts and we may lose access to many of these options. I believe we should retain some of these payment plans as an option for those who may otherwise be in financial hardship when repaying loans. The SAVE Plan, which is currently paused due to litigation, offered a government interest subsidy, which covered all interest if the total calculated monthly payment was less than the interest owed. This interest subsidy is something that should be considered in future plans. The incoming Republican trifecta should introduce a generous payment plan in Congress with a focus on limiting interest accrual.
The biggest issue with student loans is the interest that continues to accumulate, even as payments are made. Out-of-control interest is a significant issue for borrowers, especially those who have taken on extreme levels of debt. That is why the Trump administration should enact a straightforward solution that would have bipartisan support and immediately help millions of borrowers. The Trump Administration should permanently end interest on ALL federal student loans by working with Congress. Student loan interest rates should be set at 0%, which would allow borrowers to repay only the principal — the amount they agreed to pay — and nothing more. The government should not profit from citizens investing in their futures. The revenue lost by eliminating interest will be offset by an educated workforce which will drive economic growth and give millions of young people a chance to succeed without crippling debt balances.
Eliminating interest on federal student loans is the most important step to addressing the student loan crisis. Young people of today should not be penalized twice by paying for record high tuition rates and then watching it continue to accrue as they make payments well into their 40s and 50s. In this high-interest rate environment, we must understand that many students have no option but to borrow loans at the current rate.
Another option for certain borrowers to receive forgiveness is through the Public Service Loan Forgiveness program (PSLF), which covers many career paths in government, teaching, healthcare, and the nonprofit sector. The cost of college can be brought down through scholarships, Reserve Officers’ Training Corps (ROTC), and work-study programs. However, if loans must be taken out, it is the interest that is the biggest burden, and if for example, a 20-year standard repayment plan with zero interest was introduced, it would be greatly beneficial to millions of borrowers.
I sincerely hope that President Trump will take a stance on the student loan issue and allow student loan holders to have relief in a way that is fair and impactful. This is not a handout like the Biden Administration had proposed, but a way to stimulate the economy through improving access to higher education and winning the support of young voters. It is time to eliminate interest on federal student loans to get a handle on the student loan crisis.
