On Tuesday, May 22, President Trump announced his full budget. While he ran on a campaign bolstered by claims of populism and restoring power to the people, his budget does just the opposite: it cuts taxes for the wealthy while slashing foundational programs for low- and middle-income Americans. This ethos extends to the education section of the budget, which includes an overall cut of 13.6 percent, or $9.2 billion. Notably, these cuts include getting rid of the Public Service Loan Forgiveness (PSLF) and Pay As You Earn (PAYE) programs–two programs that help make unwieldy student loan payments more manageable for borrowers. To see just how much Trump’s budget would cost student loan borrowers, we calculated how much more the average 20- to 29-year-old borrower working in public service with a bachelor’s degree would pay in every state and the District of Columbia if PSLF and PAYE weren’t available. Here’s what we found:
To calculate how much cancelling the Public Service Loan Forgiveness (PSLF) and Pay As You Earn (PAYE) programs would cost young borrowers between the ages of 20 and 29 in each state and the District of Columbia, we compared how much the average young borrower would pay under the PSLF and PAYE programs with how much they’d be required to pay were the programs not in place. To estimate the effect on the average borrower working in public service, we used median incomes from each state, average student debt loads by state, and the federal government’s student loan repayment calculator. All data are from 2015, the most recent year in which data from each of these areas is available.
To find median incomes, we used the Census Bureau’s Community Population Survey, and found state-by-state median incomes for 20- to 29-year-olds who have a bachelor’s degree or higher. The median income figures were limited to those with bachelor’s degrees or higher to obtain a more accurate picture of the earnings of people with student debt. The data were collected in 2015.
For the average amount of student debt by state, we used The Institute for College Access and Success (TICAS)’s state-by-state data on the average student loan for 2015 graduates of four-year-public and four-year private non-profit institutions. TICAS did not calculate averages for North Dakota and noted that figures were not calculated “when the usable cases covered less than 30% of bachelor’s degree recipients in a given state’s graduating class in a given year or when the underlying data showed a state-level change of 30% or more in average debt from the previous year. Such large year-to-year swings likely reflect different institutions reporting each year, reporting errors, or changes in methodology by institutions reporting the data, rather than actual changes in debt levels.” We therefore excluded North Dakota from our analysis as well.
After obtaining the state-by-state median incomes for 20- to 29-year-olds with bachelor’s degrees or higher and the average amounts of student debt in each state, we used the federal government’s student loan repayment calculator to find the difference in repayment amounts over the course of a loan under PSLF and PAYE versus a standard repayment plan. The calculator allows you to determine how much one will have to pay on their loan under various repayment plans, given your loan balance, interest rate, income, and state. We used a 4.66 percent interest rate, which was the interest rate for federal direct undergraduate student loans in early 2015 (interest rates changed on July 1, 2015). The repayment calculator makes a few assumptions in calculating repayment amounts, which are available here.