President Trump’s recent budget proposal has been filling the headlines this month – but what do all those numbers mean? Will it affect you personally? Let’s consider some of the main points and how your wallet may be affected:
Your Education Bill: Do you currently have or plan to get a Pell Grant? Do you have outstanding student loans? Of the $1.4 trillion in outstanding student loans, more than $1 trillion are federally issued by the Education Department and the rest are from private banks. Trump’s income-based repayment plan would cap a borrower’s monthly payment at 12.5% of their income and for undergraduate borrowers, any debt balance after 15 years would be forgiven. For graduate school debt, any balance after 30 years would be forgiven.
As for Pell Grants, the proposed budget calls for a $4 billion reduction in overall funding, as well as capping the maximum reward without adjusting for inflation or the increased cost of tuition. This means that some prospective lower-income students will not be able to access Pell Grant funding, or find themselves forced to choose a higher cost alternative to fill any gaps above and beyond the $5,920 Pell Grant maximum.
On the plus side, the budget also calls for year-round Pell Grants, which means students who take summer course may no longer have to pay those costs out-of-pocket, provided they haven’t hit their yearly maximum.
Your Families Healthcare Bill: Trump’s budget specifically encourages states to consider stricter work requirements on Medicaid recipients, emphasizing “personal responsibility.” According to Time Magazine such work requirements could ultimately reduce the number of people with health coverage. Yet because the majority of Medicaid funds go to the elderly and disabled, cutting Medicaid would affect far more people than just those able-bodied adults currently out of work.
This will affect grandparents currently on Medicaid/Medicare. If your parents are close to retirement, they may be counting on these programs to be there after losing their insurance through their employer. This means the younger generations could end up footing more and more of their parents and grandparents health care bills.
Your Tax Bill: One major proposal is to reduce the number of tax brackets to three from the current seven, which would cut taxes for the highest earners but keep the rate the same for the lowest. The Trump administration did not say where those brackets would begin and end. That’s not a lot of information to go on, but if you make less than $50,000 annually you will probably see little to no change in your tax bill.
Here are a few examples of how the proposed budget affects departmental level spending:
Keep in mind that President Trump’s budget is only proposed and still needs to be debated and approved by Congress before the budget could be implemented.
What do you think of these changes? What changes would you make to President Trump’s proposals? Let me know in the comments below.