President Trump has been a very polarizing figure in American politics. His positions on student loans, however, might surprise you.
In 2015, as his campaign was first gearing up, Trump gave an interview to political blog The Hill. Even then, he said he was fielding questions from student borrowers and parents regarding the government’s large profit margin on student loans.
“One of the biggest questions I get is from people in college [about student loans],“ Trump told the Hill. “They’re in college — they’re doing well but they’ve got student loans up to the neck. They’re swimming in these loans.”
Trump asked why the government was profiting on student loans – to the tune of $41.3 billion in 2013 – while some students are having a hard time even finding jobs and making ends meet, let alone paying back their student loans.
“I think it’s terrible that one of the only profit centers we have is student loans,” he said.
On this issue he agrees with Sen. Elizabeth Warren (D-MA) who has been very vocal about the need for student loan reform. Trump’s plan, however, differs from Warren’s. Where the senator wants to see more government intervention, Trump’s plan seeks to get government out of higher education.
During Trump’s campaign, Sam Clovis, the campaign co-chair and policy director, told Inside Higher Ed that Trump’s goal was to move student loans to a privatized model in which colleges share the risk of loans, ending government lending to students, and discouraging liberal arts majors from borrowing at all while moving all lending back to private banks.
Not all of Trump’s plans have worked out thus far, however. In August 2017, lawmakers introduced legislation to block Trump’s plan to bring all federal loans under one servicer, leading the administration to withdraw its proposal. Citing the need for “choice and competition amongst student loan servicers,” legislators said that moving to a single-servicer model would remove options for borrowers.
Trump’s 2018 budget put forth three main proposals to revamp the student loan program. By cutting some loan repayment options, ending the Public Service Loan Forgiveness program, and changing the Pell Grants program, Trump hoped to also save American taxpayers money.
The income-driven repayment plans offered by the government can be confusing for some borrowers; Trump’s plan would cap the monthly payment at 12.5% of income, with forgiveness occurring at the 15-year mark for undergraduates and 30 years for graduate students. This would shift the burden of more overall cost to graduate students, who typically have higher-paying jobs than those with a bachelor’s degree.
Trump also wants to cut down on Pell Grant funding, usually given for financial need. In early 2017 Congress changed Pell Grants to be available to students year-round, instead of just for fall/winter semesters. This means students can get more aid and finish their degrees faster by taking summer semester classes – but it also means more cost for taxpayers.
There’s no word yet on whether Trump’s ideas for the student loan industry will all come to fruition. One thing, however, is certain – the current student loan issues show no signs of abating.