He pledged a better payment plan and quicker loan forgiveness. Instead he’s proposed ending a forgiveness program, creating bigger balances and charging higher fees.
Student loan debt now tops $1.3 trillion, according to the Federal Reserve. It’s the largest consumer debt after mortgages, and the one people are most likely to fall way behind on.
Understand: This is not just an issue for idiot millennials who can’t find purpose and stay in school for seven or eight years, blowing their loans on booze and frat parties. (Which is a stupid stereotype, but that's a subject for a different article.) No, this debt also directly affects parents and grandparents who have cosigned for loans or taken on debt of their own to help the young people in their families.
The CFPB recently reported a five-year spike in borrowers over age 60. They owe about $110 billion, more than 8 percent of all student loans. At that age, many are on fixed incomes — so it’s no surprise the CFPB says they are also increasingly delinquent.
And, of course, student loans indirectly affect everyone because they hit the economy as a whole. They squeeze everyday spending and delay or prohibit big purchases like cars and homes. That means they’re impacting Donald Trump's favorite word: JOBS.
Which makes it surprising Trump hasn’t followed through on any of his college-related campaign promises. In autumn 2016, he laid out what The Washington Post called “the most liberal student loan repayment plan since the inception of the federal financial aid program.” In a nutshell, he promised payments capped at 12.5 percent of income and student loan forgiveness after 15 years of steady payment.
Making things worse
That’s more forgiving than any of President Obama's repayment plans, although Trump also said he would narrow the repayment options available — meaning some people would probably end up making higher payments than they could afford.
“Students should not be asked to pay more on the debt than they can afford. And the debt should not be an albatross around their necks for the rest of their lives,” Trump said at the time.
Given his many second chances through bankruptcy, maybe he’s got a bit of a soft spot here. But if so, he hasn’t acted on it. Actually, he’s done a near-180.
Instead of expanding loan forgiveness, the Trump administration has waged a legal battle against people who have been enrolled in the existing Public Service Loan Forgiveness program for almost a decade, and Trump’s budget has proposed ending the program altogether for new borrowers.
The same budget proposed ending student loan interest subsidies, meaning students would owe far more than they borrowed by the time a degree earns them their first paycheck.
The Education Department has already rolled back Obama-era rules that protected borrowers, too. So far, it has:
• Removed a fee cap that debt collectors can tack onto defaulted loans
• Lowered standards for student loan servicers
• Moved toward lower accountability for schools that are little better than diploma mills.
In other words, Trump is not just making the student loan problem bigger after promising to tackle it — he’s enabling the worst actors to contribute.
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