Trump’s Plan for College Students: A Cure for the Student Loan Crisis?


Arturo Samaniego
Staff Writer

The incoming Trump administration has proposed changes to the student loan market,  particularly in how students would go about paying for loans, and a potential shift of the market from the hands of the federal government to that of the private market.

At first, Trump’s grandiose plans may appear appealing, but looking beneath the surface raises questions of how practical they really are, and the shift of loans to the private market is cause of concern for students like me who value choice in their education.

As reported by CNN in October, Trump’s student loan policies would involve capping student loan repayment at 12.5 percent of a borrower’s income and forgiving student debt after 15 years of making full payments.

Though this may sound like a reasonable plan, it is important to note (as CNN highlights in their report) that Trump has offered little to no details on the cost of this plan or how it would be paid for. A Trump aid has stated that the cost of the plan will be met by “lowering federal spending on ever-rising college tuition and fewer defaults on student loans,” according to the report.

Trump himself has claimed that unless universities are more accountable for the amount they spend on administrative cost, versus the amount they spend on students, colleges could see the loss of tax exempt status for endowments they receive; overall, this means a decrease in source of revenue for those colleges.

As a student, the thought of having my loan repayments correlate with my income and the prospect of debt forgiveness is appetizing. The only problem is that Trump has only provided surface level claims and no further in-depth explanations. This should be alarming for a number of reasons, since we do not know at the end of the day who will end up bearing the cost of Trump’s policies.

Will it be the federal government that takes up these costs, further increasing our nation’s debt? Perhaps colleges themselves will have to cut back severely on their administration that helps them fulfill their day-to-day tasks. Looking further at potential actions Trump could take in regards to student loans also brings cause for worry.

As reported by Bloomberg, our current student loan program enacted under Obama is projected to “produce $37 billion in profit from borrowers’ interest payments over the next decade.” This projected profit could be turned into a cost for the government, considering “the risk that loans on the government’s books could be worth less should the economy falter and borrowers fall behind on payments,” and if it is factored into the cost of the current loan program, according to Bloomberg.

As the article explains, this accounting shift is likely to occur under a Trump administration, making the argument that student loans should be further privatized a lot more sound. This is troubling news for reasons touched upon by Bloomberg. Under our current student loan program, almost all students who attend an accredited college are eligible for a loan, paying the same fees and interest rates.

Privatization of student loans could make students weary of what they pursue to study, as private lenders may favor certain majors and colleges over others.

It is fair to say that students should take into account the job market and financial success that their course of study offers. What is unfair is the potential for future students to be corralled into career fields they may grow to dislike, pushing them away from pursuing their true passions, all because of financial constraints. The turn from federal direct loans to the increase of privatization of student loans would mean less choice for students when pursuing their higher education.

Trump’s policies on student loans, though at first appearing promising, are not entirely clear on cost and how to pay for them, resulting in a possible loss of choice for students when pursuing their studies. I think it is important no matter how students feel about Trump’s policies to make their voices heard when it comes to this issue that can impact their future for years to come, whether it be through protest or simply calling their local representative.