“I’m the king of debt. I love debt,” Donald Trump told CNN (“fake news!”) last May.
I’m not fond of debt. Maybe it’s an acquired taste, one that requires a few bankruptcies?
Either way, my distaste is what makes me so interested in what President-elect Trump plans to do about student loans — the only kind of debt I carry. (I rent, own my car, and pay my credit card in full each month.) I still owe just shy of $8,000 and have no trouble making payments, but I know many people who owe much more and are struggling.
It’s not an issue he discussed much on the campaign trail, and it wasn’t clearly addressed in confirmation hearings this week for billionaire Betsy DeVos, Trump’s proposed Department of Education secretary. But about a month before the election, he did put out a plan for income-based repayment — an accelerated version of what has been available under Obama for years.
If it works out like he says, many Americans will pay off their student loans faster and end up paying less in interest overall. That’s a good deal. The trade-off is bigger payments: up to 12.5 percent of your income, with anything left forgiven after 15 years instead of the current 20- to 25-year options. (It’s still a slower schedule than the standard 10-year repayment plan you’re on if you don’t apply for an income-based plan.)
Personal finance site NerdWallet did a nice comparison between Trump’s plan and one of the more popular current options, REPAYE…
Trump, of course, is not much of a details guy. Or a consistency guy. Or known for putting people who know what they’re doing in charge. So I’m not taking any chances.
Jumping on Obama’s repayment plans while you still can
I figure even in the best-case scenario, where Trump still wants exactly what he says he wanted three months ago and gets it — and still offers the options Obama put in place — there’s going to be a transition period where this could be more obnoxious than usual. Best to act now if you need help with your student loan payments.
So before Obama’s Education team walks off the job and (more realistic scenario) Trump limits our options and screws everything up, I decided to take advantage of the repayment plans already on the books.
Despite there being a dozen flavors of student loan and seven different repayment programs for federal loans, the process was surprisingly easy. Step-by-step, I…
- Googled “student loan repayment plans”
- Clicked my top result. Skimmed the list of options in a table on studentaid.ed.gov that was useless to me because I didn’t remember what kind of loans I had. (Kidding, I have subsidized federal Stafford loans and a direct subsidized consolidation loan — but you can skip this step if you’re not sure.)
- Scrolled back up and read the first paragraph on the page: “You can change repayment plans at any time — for free. You can get information about all of the federal student loans you have received and find the loan servicer for your loans by logging in to My Federal Student Aid.”
- Logged in. (You likely already have an account if you’ve ever looked up your loan servicer or loan balance or recently completed the Free Application for Federal Student Aid. If not, you’ll need your Social Security number to create one.)
- Clicked Repayment Estimator in the sidebar to get a sense of my options. When logged in, it pulls your actual balances. You’ll need to know your Adjusted Gross Income from last year’s tax return to get accurate estimates.
- Clicked Apply for Income Driven Repayment Plans in the sidebar. Filled out the simple form and allowed the IRS to automatically pull my tax information in by just filling out my address. (Behind the secure login, your SSN and date of birth are already filled in.)
- Checked off “I request that my loan holder (servicer) place me on the plan with the lowest monthly payment amount.” So really, I didn’t have to do any of this thinking. But you can request a specific plan, and if you aren’t eligible, they’ll put you on the lowest-payment option you have.
- Signed and submitted the online application.
That’s it. It took less than 10 minutes from start to finish — might take a little longer if you don’t already have an FSA login and for some reason don’t have tax information available.
A few hours later, I got an email from my student loan servicer saying they got my application and were reviewing it. “Please keep making your payments as scheduled,” it said. “We’ll send you a new payment schedule detailing your repayment terms and payment amount about a month before your due date.”
I’m not sure which plan they’ll put me on, and I don’t really care — I’m going to keep making payments in the same amount I am now. There’s no penalty for doing so, and you save more on interest paying as quickly as you can afford to. But at least I’ll have the flexibility to pay less if I ever end up in a tight spot, regardless of what Trump does.
And if he surprises me by coming through with something better, I’ll do it again.
Who knows what Trump will actually do?
Here’s what Trump actually says about college affordability on his campaign website:
- Work with Congress on reforms to ensure universities are making a good faith effort to reduce the cost of college and student debt in exchange for the federal tax breaks and tax dollars.
- Ensure that the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, will be easier to access, pay for, and finish.
I can’t find the proposal he made in October on his website. (We’re fortunate the crooked, lying media document these things, I guess.) It’s hard to say if that would be the only repayment plan available going forward, or how it might affect existing student loan forgiveness.
Education Secretary designee Betsy DeVos hasn’t done much to clarify. She’s a strong supporter of charter schools and privatizing education, and has made millions in political donations to Republican efforts in that direction. She has never been a teacher or an education commissioner, as secretaries in recent memory have.
The questions at her hearing were not often about higher education, much less addressing student loans in any specifics. Asked by Sen. Bernie Sanders whether she supported the idea of tuition-free college, DeVos said “Nothing in life is truly free,” but she supports making college “affordable.”
She did appear to criticize student loan forgiveness, saying:
Escalating tuition is pricing aspiring students out of college. Others are burdened with debts that will take years or decades to pay off. There is no magic wand to make the debt go away, but we do need to take action. It would be a mistake to shift that burden to struggling taxpayers, without first addressing why tuition has gotten so high.
I’m not convinced she has much grasp of the student loan situation, though. At one point in the hearing she said that student loan debt was “up almost 1,000 percent in the last 8 years.” Sen. Al Franken corrected her with the real number: 118 percent.
She also said guns on campus are reasonable because grizzly bears exist. So, here we are. Go apply for a new repayment plan while you still can.