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A little over two years after GOP-engineered tax reform blew a hole in the deficit, the Trump administration has decided to try to fix it by slashing domestic spending, including cuts to student loan programs.
The president’s $4.8 trillion budget, released this week, would cut $6 billion from federal student loan programs in its first year and cut a total of $170 billion by 2030. As part of those cuts, the administration would kill the Public Service Loan Forgiveness program (PSLF), which was created in 2007 to incentivize college students to enter public service after college by fully forgiving their loans after 10 years of service. The Department of Education-run program began accepting applicants in October 2017, but as of 2018, it had accepted just 1 percent of applicants.
The budget also eliminates subsidized student loans such as the Federal Supplemental Education Opportunity Grants and federal Stafford loans, according to an analysis by the liberal think tank Center for American Progress. And, in a new blow to college affordability, it establishes limits on both student and parent borrowing, such as the Parent PLUS and Graduate PLUS programs. The administration argues that the measure is meant to “protect” students and parents from “racking up crushing debt, often never repaid to taxpayers.”
In total, the cuts would put borrowers on the hook for an extra $70 billion over the next 10 years, the CAP analysis said.
One of the few higher education investments the administration does want to make is expanding Pell Grants to incarcerated people ($218 million over 10 years) and for use in short-term job training programs ($405 million).
The administration defended the cuts as a cost-saving measure. “Student loans is $170 billion in savings,” White House budget director Russ Vought said in a press briefing Monday. “We are able to rationalize the many different loan forgiveness programs into one loan forgiveness program to have debt relief after 15 years of students paying for, as a percentage of their monthly income. And then after 30 years, graduate students would have debt relief.”
“So again, we believe that very real beneficiaries will see a benefit from the federal government making this reform,” Vought added.
If all of this sounds familiar, it’s because it is: Trump’s last two budgets also sought to eliminate the PSLF and subsidized student loans, although the limits on borrowing are a new measure. As with the last two, Trump’s budget stands little chance of passing, especially with a Democratic-controlled House of Representatives; historically, Congress has viewed presidential budgets more as a communication of the administration’s priorities.
The administration’s plan stands in stark contrast to Democrats running to face him in November. Current front-runner Sen. Bernie Sanders, for example, has pledged to overhaul higher education by canceling all $1.6 trillion in student loan debt and eliminating tuition at public universities, community colleges, and trade schools. (A request for comment to the Sanders campaign wasn’t immediately returned.)
In a statement to VICE News, Sanders' ally Rep. Ilhan Omar slammed the student loan cuts.
“The president wants to keep millions of Americans saddled with debt. He wants to destroy people’s hopes of starting a family or buying a home so Wall Street can profit off their pain,” said Omar, who introduced a bill earlier last year to cancel all existing student debt. “This just proves that we need bold solutions to the student debt crisis. It’s why Bernie Sanders and I have a plan to cancel all $1.6 trillion in student debt and invest that money in the American people.”
Cover: President Donald Trump speaks during a campaign rally Monday, Feb. 10, 2020, in Manchester, N.H. (AP Photo/Evan Vucci)