Student debt questions in wake of election
From the moment Donald Trump won the presidential election, people have been wondering what he’ll really do about several issues, including immigration, health care, abortion, foreign trade and taxes.
Add student loan debt and college affordability to the list.
Trump provided little clarity in the campaign about his proposals and thoughts on higher education.
“The best word to describe what he may or may not do is ‘uncertainty,’ ” said David Levy, editor of Edvisors, a financial aid and scholarship website.
But there’s one thing we do know: Trump likely won’t be proposing tuitionfree higher education for many students — a proposal floated by Hillary Clinton that the president-elect opposed.
When the new president takes office in January, here are some higher education issues to keep an eye on, based on his campaign talking points and interviews with college financial aid experts Mark Kantrowitz, Reecy Aresty and Levy.
Privatization: Kantrowitz said Trump has proposed ending the federal government’s Direct Loan program, replacing it with loans originated by banks and financial institutions. Loan eligibility would be based on a student’s future earnings potential, which raises questions about fairness to students earning degrees linked to relatively lower-income occupations.
Loan repayments: Trump has proposed replacing all federal loan repayment plans with a new income-based plan, Levy said. Under the new plan, the monthly payment would be based on 12.5 percent of a borrower’s discretionary income, with forgiveness of the remaining debt after 15 years of repayments. That’s a slight shift from current policy of payments based on 10 percent of a borrower’s income, and loan forgiveness after about 20 years.
Taking on the watchdogs: Trump has said he would consider cutting or shutting down the U.S. Department of Education, although Kantrowitz said those remarks were made in the context of K-12 education. So it’s unclear whether any policies would apply to higher education and how.
Experts also wondered if Trump will take on the federal Consumer Financial Protection Bureau, the consumer agency created during the Obama administration that’s largely been responsible for policing predatory student loan servicing companies, credit card issuers and other businesses that touch college students and families.
Lowering college costs: The president-elect may try to trim college costs by reducing the “administrative bloat” caused by federal regulations and compliance paperwork. Theoretically, those savings could then be passed on to students.
Kantrowitz said Trump has also mentioned the need for colleges to have “more skin in the game” by sharing more of the financial risk of student loan defaults and by requiring schools to spend more of their endowments on students.
Rhetoric aside, Aresty cautioned parents with college-age kids not to get too caught up in post-election policy debates and to focus more on the tasks at hand before the end of 2016 — filling out the Free Application for Federal Student Aid and taking advantage of investment and tax opportunities that can further reduce college costs.
Perhaps the best hope for families trying to save for college lies with Wall Street. If it views a Trump White House favorably and stock prices continue to crank higher, that would boost the value of the popular state-sponsored 529 college savings plans and other collegefocused investments.
Questions, comments, column ideas? Send an e-mail to srosen@kcstar.com.