Introduction to the Crisis
Chicagoans with student debt are feeling whiplash and confusion under the Trump administration. While President Donald Trump’s predecessor canceled $183 billion in student loans for more than 5 million Americans, Trump has called those actions illegal and is removing pathways to affordable monthly payments and loan forgiveness. Earlier this month Trump’s Department of Education restarted collections for borrowers in default, meaning their wages and social security benefits could be garnished.
The Impact on Borrowers
In the meantime, the SAVE plan, the most affordable repayment plan offered by the federal government, remains held up in the courts by Republican legal challenges. More than 8 million borrowers who were on it have been placed on administrative forbearance — and don’t know when they will have to start making payments again and how much they will have to pay. Conservative lawmakers have proposed replacing it with a plan that the Student Borrower Protection Center says would significantly increase what most people have to pay each month and force even the lowest-income earners to make payments they cannot afford.
Personal Struggles
“I’m not prepared,” said Jay Baker, a Chicagoan who qualified for $0 payments under the SAVE plan. “I don’t even know how much I’m going to start being charged, so it’s a little scary. Everything’s kind of up in the air right now.” Baker, 30, took out more than $5,000 in federal student loans to get his associate’s degree in paralegal studies at City Colleges of Chicago. He had been working at a catering company for several years when the pandemic hit. “I was out of work for a month because I was in the proximity of someone who had COVID,” said Baker. “That made me realize I needed to go back to school to keep my finances at least stable.”
Financial Consequences
He’s now a legal assistant at a firm downtown. But he said he is still living paycheck to paycheck and that monthly student loan payments would significantly cut into his finances. “I would probably have to buy less groceries … and get rid of my car,” said Baker, who rents an apartment in the Belmont Cragin neighborhood. “I’ll probably have to send my mom less money. She lives in the Philippines … and she’s already asked for more than I can afford, so having to send her less is probably going to be painful for both of us.”
Another Borrower’s Story
Lacourdaire Camargo in the Little Village neighborhood of Chicago, where has she lived nearly her entire life. After working for many years, Camargo went back to school in order to gain financial stability. But the student loans she borrowed are hurting her ability to save for a home and for retirement. Longtime Little Village resident Lacourdaire, or “Lucky,” Camargo agrees. After working for many years in real estate and education nonprofits and experiencing two periods of financial instability, she went back to school to get her undergraduate and master’s degrees in economics.
Conclusion
In conclusion, the Trump administration’s policies on student debt relief have left many Chicagoans feeling uncertain and stressed about their financial futures. The removal of pathways to affordable monthly payments and loan forgiveness has made it difficult for borrowers to make ends meet, and the proposed replacement plan may only exacerbate the problem. It is essential for policymakers to consider the impact of their decisions on individuals and families struggling with student debt.
FAQs
Q: What is the SAVE plan, and how does it affect borrowers?
A: The SAVE plan is the most affordable repayment plan offered by the federal government. However, it remains held up in the courts by Republican legal challenges, leaving over 8 million borrowers in administrative forbearance and unsure of their future payment amounts.
Q: How have the Trump administration’s policies affected student debt relief?
A: The Trump administration has called previous student debt relief actions illegal and is removing pathways to affordable monthly payments and loan forgiveness. This has left many borrowers feeling uncertain and stressed about their financial futures.
Q: What are the potential consequences of the proposed replacement plan?
A: The proposed replacement plan may significantly increase what most people have to pay each month and force even the lowest-income earners to make payments they cannot afford, according to the Student Borrower Protection Center.
Q: How can individuals and families struggling with student debt seek help?
A: Individuals and families struggling with student debt can seek help from organizations such as the Student Borrower Protection Center and by contacting their representatives to express their concerns about the current policies and proposed changes.
