The Uncertainty of the Student Loan Crisis in the Age of Trump

Education Policy Brief #198 | By: Evan Wechman | January 26, 2024

Photo by Good Free Photos on Unsplash

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Policy Summary:

Former President Joe Biden was passionate about providing access to student loans so anyone, regardless of financial status, could pursue higher education. Throughout his term, he successfully forgave the student loan debt of over 5.3 million borrowers, totaling over $188.8 billion.

These forgiveness programs were primarily for low-income earners who would be saddled with debt for many years after finishing their education. He also excluded any debt from students who were defrauded by for-profit universities.

However, if the debt could not be discharged, he at least sought to make the payments easier through his SAVE (Saving on a Valuable Education) plan. SAVE cut many payments in half and forgave other debts altogether. 

 But many Republicans argued this was a clever way around the U.S. Supreme Court’s ban on a complete student loan forgiveness program. Therefore, many provisions are on hold as Democrats and Republicans plan to battle it out in court.

The Biden administration also made it easier for individuals seeking bankruptcy protection to include student debt under their new guidelines. For years before former President Biden took office, it was nearly impossible to walk away from student debt when filing for bankruptcy.

Now that President Trump has taken the reigns again, many of the successes of the Biden team in this realm remain uncertain. From outright student loan forgiveness to tax deductions for student debt, many Republicans on Team Trump are seeking to roll back much of Biden’s proposals.

Though President Trump has not been very specific about how we will attack the student loan issue, he did describe Biden’s debt forgiveness efforts as “vile” and “not even legal.”

 

Policy Analysis:

To predict how the Trump administration will handle both student loan forgiveness and modification, one must look only at his track record.  

The President has not only called for the elimination of the Department of Education but has ridiculed Biden’s attempts at helping individuals navigate their student debt.

The well-respected quote from Maya Angelou should be remembered. “When someone shows you who they are, believe them the first time,” she said. 

Trump and his allies have shown time, and again they are interested in protecting their rich, upper-class allies while neglecting people with fewer resources.  For example, the dismantling of the Department of Education will  set back public education for the public which consists of many families just trying to help their children achieve a good education.

Likewise, when Trump refers to Biden’s efforts to help those manage their student debt as “vile,” we should take him at his word.  He sees nothing positive in helping people with few options create a better life rather than being saddled with debt as adults.

Trump doesn’t have to worry about how student debt will affect his cronies.  The likes of Elon Musk and other billionaires will not have to fret about how their children will pay back high-interest loans.

Even smaller efforts like enabling student debt to be included in bankruptcy protection are not important to this administration.  Trump has no problem with many of his businesses using bankruptcy laws to protect their assets, but when it’s for the working class, he and other Republicans question the legality of such measures.

 During Trump’s first term, he tried to eliminate Public Service Loan Forgiveness (PSLF) but failed. Since PSLF is a Congressional program, Trump may try to sway his allies in the House to end the program, which helps qualify more individuals for student loan forgiveness.

As for how the new administration will handle debt incurred by fraudulent for-profit universities, one must only remember the controversy surrounding Trump University where they manipulated students into spending money on courses with little substance.

We as a nation can’t afford to trust someone who would prey on young people trying to better themselves.

 

Engagement Resources

 

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