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Where Is the New President-Elect Trump on Student Loans?
America has voted and now the unpacking of nearly 18 months of commitments will commence. As half the country begins to wind down their emotional unloading on to Facebook and Twitter, the next real move will be for us to search for what President-elect Trump has coming down the pipeline in his first 100-day policy rollout. Here is a peak through a Trump White House window regarding the student debt crisis.
Student Loans and The Federal Government Profiting
Contrary to his reputation as a staunch capitalist, Trump as expressed his distaste for the federal government’s profit generating student loan system. Last July he told The Hill,
“…probably one of the only things the government shouldn’t make money off. I think it’s terrible that one of the only profit centers we have is student loans.”
This may shed light into how he may approach the loans issued with unfavorable terms and interest rates.
Trump told a crowd of students in Roanoke, Virginia last month: “Students should not be asked to pay more on their loans than they can afford.” “The debt,” he said, “should not be an albatross around their necks for the rest of their lives.” President-elect Trump may move to make repayment more affordable by shortening the maximum time the government will ask Americans to pay their loans.
Currently, the Obama Administration has enforced an executive order to dismiss student debt after 20 years. President Obama’s formula for Income Based Repayment (IBR) is 10% of one’s income while Trump has discussed 12.5% of a person’s income. The other difference is President-Elect Trump will dismiss any debt after only 15 years, shortening the current plan by 5 years.
Based on his statements, the President-elect appears to be for continuing to help Americans through the student debt crisis. Even though a direct dismissal would likely win popularity for Trump amongst millennials, his ties to the Republican party will more than likely keep the more progressive idea of complete debt discharge in check. This is not the answer nearly 41 million Americans might have hoped to hear. Nevertheless, his ideas for repayment could still be left of Obama’s program in that he’s trying to make repayment shorter and less costly.
Consumer Financial Protection Bureau
A Republican administration is traditionally against compliance and historically has been for deregulation and downsizing government’s role in business. This could reduce or even disband the power of this new agency championed by President Obama and Senator Elizabeth Warren. That in turn could make it harder for students to gain any leverage when dealing with large private loan servicers like Navient who dictate student loan consolidation terms, rates, and collections.
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