$1.26 Trillion Student Loan Debt in U.S Gets a Relief


Trump’s new policies towards putting tighter restrictions on student loan borrowers on how they pay their owed debt will be put under an intense test as the Obama Administration is leaving behind a subsidy that will cost the national taxpayer nearly $108 billion in written off loans.

The high subsidy was part of President Obama’s initiative to lower the student loan burden through his income based repayment plans which asked the borrower to pay a part of his/her income for a period of 10 or 20 years (based on public or private employment) after which the rest will be written off by the Government.

The amount to be repaid monthly as part of the plan is a meager 10% of the discretionary income which is the equivalent of being nearly 150 times above the national poverty level in terms of income earned.

According to the plan, the actual monthly payment owed is replaced by a more relaxed plan that inevitably lowers the amount by hundreds of dollars. The revelation came in a report released by the Government accountability office that reiterated the fact that the Government’s calculation regarding the amount of money to given in subsidies will be a lot higher than previously calculated.

The Report further added that the Government owned loans total to around $355 billion out of which $108 billion won’t be returned because the borrowers would have completed their terms of compliance according to the income repayment plans, leaving the rest in subsidy.

The total amount is still a forgone conclusion as these loans would take at a period of at least 30-40 period to fully realize, after which we could calculate the total amount to be written off.

Trump would have a hard time repealing the Obama reforms without meeting agitation from the benefiters, a scenario which could damage the popularity of the leader.