How Will Trump Impact Your Law School Student Loans?
Like most everyone else, you graduated law school with six figures of student debt. Like most everyone else, you didn't end up with a job where you could pay back those loans in a few short years. You might even be struggling to make your monthly payments right now. You may be on an income-based repayment plan and hoping for future loan forgiveness.
Now that Donald Trump has been elected, on a promise to shake up Washington (among other things), what does that mean for your law school loans?
Trump's Student Loan Plan
Trump laid out his student loan plans in a speech this October, promising what the Washington Post called "the most liberal student loan repayment plan since the inception of the federal financial aid program."
"Students should not be asked to pay more on the debt than they can afford," Trump announced. "And the debt should not be an albatross around their necks for the rest of their lives."
The announcement didn't win Trump the youth vote, but if he follows through on his promises, it could shake up how you pay back your law school loans, costing you a bit more in the short term in exchange for earlier loan forgiveness.
The federal government currently offers four income-based repayment programs to help students unburden themselves from federal student loans in an affordable fashion. The repayment plans are all slight variations on the same theme: pay 10 percent of your discretionary income every month and your outstanding loans will be forgiven after 20 years. (Some plans require a higher percentage of your income and a longer payment time.)
Under Trump's plan, borrowers' payments would be 12.5 percent of their income and the outstanding balance would be forgiven after 15 years. Overall, most borrowers would end up paying less under Trump's plan than under the current repayment schemes.
Is It Possible?
Trump has only outlined the basics of his plan, and some of his election campaign positions are already changing, just a week after the vote. Loan forgiveness is also opposed by many conservatives, who view it as a giveaway to highly-educated professionals, like lawyers. But, revising federal loan repayment wouldn't be difficult for Trump to accomplish. It would simply require new rulemaking through the Department of Education. No Congressional action is needed.
But remember, loan forgiveness doesn't mean you can walk away from your debt scot free. Those forgiven loans are treated as income by the IRS.
- Top 5 Tips for Dealing With Your Law School Student Loans (FindLaw's Greedy Associates)
- Is There a Downside If Your Firm Pays Your Student Loan Debt? (FindLaw's Greedy Associates)
- Tuition.io Lets You See How Sad Your Student Loan Situation Is (FindLaw's Greedy Associates)