What Effect Will a Trump Administration Have on My Student Loans?
Donald Trump was victorious in part thanks to his supporters’ belief that he could fulfill on his promise to “Make America Great Again.” There’s a significant amount of suffering in the United States right now among the middle class for a variety of reasons, and student loans are one of the primary culprits.
From elementary school through high school, young people in the United States hear the near constant refrain that “a college education is your only path toward a good career,” or a similar sentiment. That attitude, along with pressure from family and a desire to follow one’s dreams, has resulted in more young people enrolling in college than ever before.
There was an 18 percent increase in college enrollment between 1993 and 2003, and another 20 percent increase between 2003 and 2013. This equates to about 3.5 million more students seeking degrees compared with 10 years prior.
As of 2013, approximately 69 percent of college students were graduating with student loans. In 2016 the average graduate’s debt totaled $37,172.
There are some problems in society that affect a relatively narrow swath of people, but this is an issue that affects a whole lot of people at ever-growing rates. It’s a visible problem too. Everyone knows recent grads who are seeing half, or more, of their monthly take-home pay go straight to their lender.
The ramifications of this are huge, not only for the quality of life, but the economy as well. Depending on the cost of living wherever a recent grad happens to be, that kind of monthly expenditure can result in destitute living conditions.
That’s also a lot of money people would be spending elsewhere on gadgets, houses, dining, entertainment, vehicles and all kinds of other consumer goods that would put more money into the economy. Instead they are accruing interest to the point where nearly 60 percent have no clue as to when their loans will be paid off and they can begin living without a ball and chain on their spending habits.3
Also consider the effect this has on savings. Most financial advisors will suggest people begin saving for retirement during their first job. But many young people today are putting off investing in their 401(k) because they don’t have the extra income to eke out even minimal savings.
So what happens when a generation of young people retire with little to no savings, because they spend the first 20 years of their professional career paying off student loans? The rest of the country and our safety net programs will have to pick it up, further hamstringing the national economy.
It’s hard to argue student debt isn’t a problem. How to fix it is the big question, and your answer depends primarily on where you fall on the partisan political spectrum. So what would President Trump’s approach be?
It’s hard to know exactly what a president will do when they get into office, because there are always lofty campaign promises that never come to fruition. Many of these promises are blatantly absurd but, because a significant portion of the electorate doesn’t understand the legislative process, they base their vote on the idea that a president will have free reign to accomplish exactly what they say on the stump.
In October, Trump said monthly student loan payments would be capped at 12.5 percent of a recent grad’s monthly income. If a student kept up their payments for 15 years the debt would be entirely forgiven.
During that campaign speech he said student debt, “should not be an albatross around their necks for the rest of their lives,” but actions speak louder than words and it’s hard to know for sure what he will try to accomplish until an effort is made.
If You’re Struggling with Student Debt, Consider Contacting American Financial Solutions
Recent graduates who are really struggling to make ends meet, while paying off their student loans, should consider talking to a student loan counseling company such as American Financial Solutions. We employ certified student loan counselors who would be happy to discuss all of the potential solutions, including debt consolidation, loan forgiveness and income-based plans. You don’t have to spend the next 10 years struggling to make ends meet. Contact one of our specialists today.
Published Jan 25, 2017.