Trump’s Student Loan Policies: 5 New Things
As the political landscape changes, new information about Donald Trump’s student loan policies is emerging. His approach represents a significant departure from current programs, leaving millions of American borrowers uncertain. Here are five new aspects of his evolving platform.
5 New Things to Know About Trump’s Student Loan Policies
1. A Plan to End Public Service Loan Forgiveness
One of the most specific proposals is to end the Public Service Loan Forgiveness (PSLF) program. This popular program cancels the remaining federal student debt for eligible government and nonprofit employees after 10 years of payments.
Critics of the program argue it is too costly, while supporters say it is essential for attracting talent to vital public sector jobs. Ending PSLF would be a major change for teachers, nurses, and other public servants.
2. Targeting Wealthy University Endowments
Trump and his policy advisors have floated a plan to force wealthy private universities to share in the financial risk of student loans. Under this proposal, colleges with large endowments could be required to pay for a portion of federal student loan defaults from their former students.
The goal is to give universities “skin in the game” and incentivize them to control tuition costs and ensure graduates can find good jobs. The specifics of how this would be implemented remain unclear.
3. No More Blanket Loan Forgiveness
The Trump campaign has made it clear it opposes the kind of broad, executive-ordered student loan forgiveness pursued by the Biden administration. This signals an end to attempts at wide-scale debt cancellation without congressional approval.
This position aligns with a more fiscally conservative approach to the national student debt crisis, which now exceeds $1.7 trillion according to the Federal Reserve.
4. A Focus on ‘Gainful Employment’ Rules
Another key focus is strengthening and enforcing “gainful employment” rules. These regulations aim to cut off federal student aid to vocational programs and universities whose graduates consistently have high debt-to-income ratios.
The policy aims to safeguard students from predatory for-profit colleges and programs that fail to provide a satisfactory return on investment. However, the specifics of enforcement have been a subject of ongoing debate.
5. A New, Simpler Repayment Plan
While opposing current income-driven repayment (IDR) plans, Trump has indicated a desire to create a single, simplified new plan. This plan would likely cap a borrower’s monthly payment as a percentage of their discretionary income.
However, key details—such as the repayment percentage and the timeline for forgiveness—have not been released. This leaves a major question mark over how a new system would compare to existing options available on the official StudentAid.gov website.
Key Takeaways
- Ending PSLF: Trump has proposed ending the Public Service Loan Forgiveness program.
- University Accountability: His plans would target wealthy universities, making them share financial risk.
- No Blanket Forgiveness: He opposes broad student debt cancellation via executive action.
- Gainful Employment: A key focus is on holding low-performing college programs accountable.
- New Repayment Plan: He aims to create a new, simpler income-based repayment plan, but details are scarce.
Also read, Trump vs The Fed: The Battle for America’s Economy.
Frequently Asked Questions (FAQs)
Donald Trump does not have one single main proposal but a collection of ideas. Key points include ending the PSLF program, holding wealthy colleges financially accountable for loan defaults, and creating a new income-driven repayment plan.
His campaign has clearly stated its opposition to broad, “blanket” student loan forgiveness like that attempted by the Biden administration. His focus is on repayment plans and college accountability rather than mass cancellation.
Proposals to enforce “gainful employment” rules and make universities with large endowments co-sign loans could have a significant financial impact. The goal is to pressure schools to lower tuition and improve graduate outcomes.
Jason Brooks is a senior financial journalist and market analyst at ReadBitz.com, where he serves as a trusted guide to the fast-paced and complex world of stocks and finance. With a sharp eye for market trends and a commitment to data-driven reporting, he delivers daily news and analysis designed to empower investors, traders, and business leaders with the clarity needed to navigate the global economy.