By Majel Hein, Program Director of Consumer Credit Counseling Service (CCCS) of La Crosse
Author Joyce Meyer says that, “Change is always tough. Even for those who see themselves as agents of change, the process of starting a new thing can cause times of disorientation, uncertainty and insecurity.”
Change is inevitable in every aspect of life. So when Donald Trump defeated Hillary Clinton for the position of the 45th President of the United States, many student loan borrowers were left pondering how his plans for dealing with the student loan crisis will affect them. This concern is not unusual, it arises every time there is a change in our nation’s leadership.
There are of course no laws in place as of yet, but what we can deduce from what our new President has said already is that the government may consolidate ALL current repayment plans into a single Income-Based Repayment program (IBR) where students pay 12.5% of their income toward their loans each month and receive total loan forgiveness after 15 years. This seems like a reasonable option, but what has been failed to mention is, what is considered income in this scenario? Our current IBR plans are based off a percentage of a borrower’s income over the poverty line based on their family size. If this is still the case it is a very viable option considering right now an IBR is 15% of a borrower’s income over the poverty line. This may, presumably, eliminate the REPAYE program though where the percentage is 10% but we are sitting right in the middle which could be considered a reasonable happy medium.
Another potentially positive look on this idea is that it would decrease the amount of confusion borrowers go through when choosing their repayment plan- there would be just one! Currently a student loan borrower has eight repayment plans to choose from with all different kinds of criteria to think about when it comes to loan forgiveness and affordability.
There are still some uncertainties though, will disability discharge on student loans still exists or teacher loan forgiveness after five years? Also, the new administration has discussed that they plan to cover increased forgiveness amounts (and the higher cost to taxpayers) due to shorter repayment terms by lowering federal spending accordingly. As a nation we are not sure what will be cut to make up for the forgiveness amounts.
However, what we do know is that there is no magic wand to fix the student loan crisis and money borrowed does have to be paid back. I always tell my clients; there is no magical way out of debt, we either increase income, decrease expenses, and sometimes it is a little bit of both.
We are a strong, resilient nation and, though change is hard, we must be optimistic and work with what we have. Of course, if you or anyone you know has questions about their student loans feel free to reach out to your local NFCC agency and their certified student loan counselors for help.
About the Author:
Majel Hein is the Program Director of Consumer Credit Counseling Service (CCCS) of La Crosse and a Certified Credit/Housing/Student Loan Counselor and Educator. She was voted NFCC’s Counselor of the Year in 2016. Hein studied finance at Western Technical College and has been with the agency since October 2013. She has also completed courses at Viterbo University for Nonprofit Leadership Development. Before CCCS she spent years in the financial industry working for a financial institution and also taking on the challenge of being a debt collector. “I have seen both sides of the financial world and the place I like to be is in the middle, helping individuals and families achieve and maintain financial stability.” Says Hein.