Trump Proposes Cuts to Federal Student Aid Programs



Betsy DeVos, who heads the education department, supports these cuts.


Fordham students utilizing loans to pay for their education may need to reevaluate their repayment options come 2020. Proposed cuts to education spending may end both federally subsidized loans and federal loan forgiveness programs.

The Trump administration’s proposed budget for next year, released March 11, seeks to cut roughly 10 percent — about $7.1 billion — of funding from the Department of Education, as well as $1.4 billion in unused Pell Grant funding, totaling an overall 12 percent decrease in education spending from 2019.

These cuts would mainly effect three federal programs for funding higher education.

  • The Pell Grant program, which would lose of unused funds from previous years. Pell Grants are awarded to low-income students, as determined by the Free Application for Federal Student Aid (FAFSA) and do not need to be repaid to the government. The grant program would lose $1.4 billion in “unobligated balances,” referring to money that has not yet been assigned to students.
  • Federally subsidized loans, which would be eliminated from the Department of Education. Subsidized loans are given by the federal government directly to students and do not accrue interest while the student is in school. The federal government also supplies unsubsidized loans, which begin accruing interest immediately after they are distributed. A student’s loan package is also determined by their FAFSA information. Under the 2020 proposed budget, all new federal loans distributed would be unsubsidized.
  • The Public Service Loan Forgiveness Program, which would also be cut under the proposed budget. Introduced by President George W. Bush in 2007, the program allows students who have worked for approved public service employers (such as the federal, state or local government or certain nonprofits) for 10 years to have their remaining balances forgiven if they have kept up with payments. The first class of applicants eligible for aid was in 2017. Under the current administration, 99 percent of applicants to this program have been denied. In addition, a recent decision by a New York federal district court found the actions of the department to be “arbitrary and capricious” in regards to changing the list of approved employers for the program, which resulted in the denial of several applications that previously would have been eligible for loan forgiveness.

The proposed budget also outlines a new program to “streamline” the repayment process for undergraduate federal loans, leaving only one avenue for federal repayment. Under this plan, monthly loan payments would be capped at 12.5 percent of income, and any outstanding balance after 15 years of payments would be forgiven.

These changes will decrease the number of options students have to finance their educations and likely result in higher costs for borrowers past 2020. However, the proposed budget will almost surely undergo revision as it passes through the Democratic-controlled House of Representatives, which stated strong opposition to many aspects of the budget.