Trump plan takes on student loan debt

Crooked admissions schemes aren’t the only problem plaguing colleges and their students these days. The cost of a degree from a private college continues to rise, moving well beyond what most families can dream of paying even with financial aid. Most colleges assume students will take out loans to make ends meet, and they figure that borrowing into their calculations when they make financial “awards.”

As a result, Americans ages 19 to 29 have amassed $1 trillion in debt, according to a February report by the Federal Reserve Bank of New York, mostly in the form of student loans.

The biggest debt holders are students of for-profit colleges, accounting for 13 percent of all college students but for more than half of all student-loan defaults. And many for-profit colleges promise students far more than they deliver in marketable skills, leaving them without the careers they had expected.

For better and worse, President Donald Trump addressed both of these issues in a plan for higher education announced Monday, with enough good ideas to start a discussion in Congress — and enough worrisome elements to merit caution.

Among promising requests are ones to streamline the application and repayment for federal student loans. There would be one incomedriven repayment plan for each level of higher education: Undergraduates would pay 12.5 percent of their discretionary income for 15 years; anything unpaid at that point would be forgiven, allowing them to finish five years earlier than current plans do. But graduate students would pay for 30 years at the same rate, five years longer than they currently do.

Of more concern is the proposal to limit how much graduate students can borrow in federal loans; there is currently no restriction. Goals are to reduce some of the crushing debt and give graduate schools less incentive to continually raise prices.

But rather than reducing their borrowing, many students and their families would probably turn to private, rather than federal, lenders, receiving less-favorable terms. Low-income families might not be able to get these loans at all, limiting the ability of the people who need the most help to attend graduate school.

The Trump administration would allow Pell grants for people leaving prison, which should have happened long ago, and establish short-term programs to train people for vocational certificates and licenses rather than degrees. That’s fine, as long as they’re legitimate job-training institutions.

The majority of loans at for-profit colleges go into default, yet Trump has gone out of his way to free the schools from Obama-era regulations intended to crack down on shady marketing and low performance.

Trump’s emphasis on efficient, short-term vocational training is welcome; not everyone needs to go to college. But loans should be provided only for accredited programs with strong records of sending their students on to successful careers. The president surely should know the difference between that and the kinds of programs that should not qualify for federal loans; he ran a real-estate training business that closed after paying $25 million to settle lawsuits claiming misleading marketing practices. Taxpayers shouldn’t be footing loans for institutions that resemble Trump University.