An analysis released by NerdWallet this week found that student loan borrowers would pay more each month under an income-driven repayment proposed by President-elect Donald Trump, compared with the most widely available existing income-driven plan.
But NerdWallet also found that, including interest, borrowers earning low salaries would pay less over the lifetime of the plan because of a shorter debt forgiveness timeline. Borrowers with higher salaries would also pay more in federal debt because they would take longer and incur more interest to pay off their loans.
There are currently four income-driven repayment plans for federal student loan borrowers. The REPAYE plan, which NerdWallet compared to Trump’s campaign proposal, is not the most widely used plan but is most widely available to borrowers. Like other income-driven plans, it caps monthly loan payments at 10 percent of discretionary income. Remaining student loan debt would be forgiven after 20 or 25 years, depending on whether the loans were taken out before or after July 2014.
Trump’s plan, which he outlined in an October speech, would include a 12.5 percent cap, but it would shorten the debt forgiveness timeline to 15 years.
Read more at Inside Higher Ed: https://www.insidehighered.com/quicktakes/2017/01/13/analysis-borrowers-would-pay-more-trump-plan