Let’s take a giant, semi-blind leap forward and take a guess at what would happen to student loans if either Donald Trump or Hillary Clinton, the current Republic and Democratic poll leaders, are elected to Presidency. It looks like both candidates are aware of the student loan crisis and believe the federal government should not profit from student loans.
Trump seems to understand first-hand the importance of having an escape hatch from dire financial straits with his bankruptcy experience. He also proposes jobs creation as a solution.
Clinton has unveiled the “New College Compact” which includes similar provisions to the current IBR/PAYE/REPAYE plans, as well as major changes such as, “students should never have to borrow to pay for tuition, books, and fees to attend a 4-year public college in their state.”
PSLF does not appear to be on the chopping block for either candidate. Clinton specifically states, “And we’ll make a promise to students who perform national service. If you’re willing to spend years tutoring America’s kids or cleaning up our parks or helping communities hit by disasters, we’ll guarantee that you can attend your public university or college debt-free.”
Donald Trump on Student Loans: Government Shouldn’t Make Money on Student Loans
Donald Trump Interview with The Hill (http://thehill.com/policy/finance/248913-trump-why-is-federal-government-making-money-on-student-loans) on July 22, 2015:
“One of the biggest questions I get is from people…even a little bit younger than you…they’re in college — they’re doing well, they’ve got student loans up to the neck. They’re swimming in these loans.”
“And one of the only things the government makes money on, and honestly that’s probably the one thing the government shouldn’t make money on.”
“I think it’s terrible that one of the only profit centers we have is student loans.”
“I’ll see so many young people and they work really hard for four years. They borrowed money. Their parents don’t have much. They work all together and they mortgage their future,” the real estate magnate said.
“They get good marks — I’m not even talking about the ones that are at the bottom, I’m talking about the ones at the top. They can’t get jobs and they don’t know what to do.”
“I don’t want to raise the minimum wage. I want to create jobs so people can get much more than that, so they can get five times what the minimum wage is.”
Trump’s position matches that of Massachusetts Senator Elizabeth Warren, a Democrat, who frequently criticizes the profits the government makes on federal student loans.
Hillary Clinton on Student Loans: Costs Won’t Be a Barrier. Debt Won’t Hold You Back.
On August 20, 2015, Hillary Clinton unveiled her plan, “The New College Compact” (https://medium.com/@HillaryClinton/the-new-college-compact-73652df9543c and https://www.hillaryclinton.com/p/briefing/factsheets/2015/08/10/college-compact/). “This plan will cost in the range of $350 billion over 10 years – and will be fully paid for by limiting certain tax expenditures for high-income taxpayers.”
For future students, costs won’t be a barrier. Under the New College Compact, “students should never have to borrow to pay for tuition, books, and fees to attend a 4-year public college in their state. Students at community college will receive free tuition. Students will have to do their part by contributing their earnings from working 10 hours a week. The Federal government will make a major new investment in the New College Compact and will never again profit off student loans for college students.”
For student loan holders, the debt won’t hold you back. “If you have student debt, you will be able to refinance your loans at current rates, with an estimated 25 million borrowers receiving debt relief. Typical borrowers could save $2,000 over the life of their loans. For future undergraduates, the plan will significantly cut interest rates so they reflect the government’s low cost of debt. This can save students hundreds or thousands of dollars over the life of their loans. Everyone will be able to enroll in a simplified income based repayment program so that borrowers never have to pay more than 10 percent of what they make.”
“For the millions of Americans who already have student debt, my plan will give you the chance to refinance at lower interest rates. If you can refinance your mortgage or your car loan, you should be able to refinance your student loan. It’s just wrong that people are locked into college loans at 8, 9, even 10 percent.”
“And we’re going to do a lot to encourage innovation. Here’s one example. Workers are increasingly rebooting their careers through online programs — yet many students can’t use federal student aid to pay for them. If earning online badges, specializations, or nano-degrees helps people improve their job prospects, we should be making that option easier and more affordable. Under my plan, more students will be allowed to use student aid to pay for high-quality programs. And we’ll make sure that rules about accreditation don’t keep out promising online education companies. We want to keep quality high — without stifling innovation.”
Presidential Candidates on IBR and Student Loan Forgiveness
Donald Trump: Bankruptcy: I’ve Used the Laws of the Country to My Advantage
Trump hasn’t rolled out a plan yet, but during the Republican Party Presidential Debates on August 6, 2015 (http://time.com/3988276/republican-debate-primetime-transcript-full-text/), he seemed amenable to a related issue, bankruptcy:
WALLACE: Mr. Trump, you talk a lot about how you are the person on this stage to grow the economy. I want to ask you about your business record. Trump corporations — Trump corporations, casinos and hotels, have declared bankruptcy four times over the last quarter-century.
In 2011, you told Forbes Magazine this: “I’ve used the laws of the country to my advantage.” But at the same time, financial experts involved in those bankruptcies say that lenders to your companies lost billions of dollars.
Question sir, with that record, why should we trust you to run the nation’s business?
TRUMP: Because I have used the laws of this country just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, for myself, for my employees, for my family, et cetera.
I have never gone bankrupt, by the way. I have never.
But out of hundreds of deals…
WALLACE: No, but the concept sir…
TRUMP: Excuse me. Excuse me.
WALLACE: … that’s your line, but your companies have gone bankrupt.
TRUMP: Excuse me, what am I saying? Out of hundreds of deals that I’ve done, hundreds, on four occasions I’ve taken advantage of the laws of this country, like other people. I’m not going to name their names because I’m not going to embarrass, but virtually every person that you read about on the front page of the business sections, they’ve used the law.
The difference is, when somebody else uses those laws, nobody writes about it. When I use it, they say, “Trump, Trump, Trump.” The fact is, I built a net worth of more than $10 billion. I have a great, great company. I employ thousands of people. And I’m very proud of the job I did.
Again Chris, hundreds and hundreds of deals. Four times, I’ve taken advantage of the laws. And frankly, so has everybody else in my position.
WALLACE: Well sir, let’s just talk about the latest example…
… which is Trump Entertainment Resorts, which went bankrupt in 2009. In that case alone, lenders to your company lost over $1 billion and more than 1,100 people were laid off.
TRUMP: Well, I…
WALLACE: Is that the way that you’d run the country?
TRUMP: Let me just tell you about the lenders. First of all, these lenders aren’t babies. These are total killers. These are not the nice, sweet little people that you think, OK?
You know, I mean you’re living in a world of the make-believe, Chris, you want to know the truth.
And I had the good sense to leave Atlantic City, which by the way, Caesars just went bankrupt. Every company, Chris can tell you, every company virtually in Atlantic City went bankrupt.
And let me just tell you. I had the good sense, and I’ve gotten a lot of credit in the financial pages, seven years ago I left Atlantic City before it totally cratered, and I made a lot of money in Atlantic City, and I’m very proud of it. I want to tell you that. Very, very proud of it.
TRUMP: And by the way, this country right now owes $19 trillion. And they need somebody like me to straighten out that mess.
Hillary Clinton: 10% Cap on IBR, Loan Forgiveness After Fixed Period of Time, Loan Forgiveness for National Service
Clinton unveiled her New College Compact plan, https://medium.com/@HillaryClinton/the-new-college-compact-73652df9543c, which sounds like she’ll be marching on with IBR, forgiveness after a fixed period of time under IBR/PAYE/REPAYE, and something similar, if not the same as the current PSLF.
For existing borrowers: “We’ll make it easier to enroll in income-based repayment programs, so you’ll never have to pay more than 10 percent of what you make — and your debt will only last for a fixed period of time. It won’t hang over your head forever.”
For future borrowers, it’s a much better deal: “Under my plan, tuition will be affordable for every family. Students should never have to take out a loan to pay for tuition at their state’s public university. We’ll make sure the federal government and the states step up to help pay the cost, so the burden doesn’t fall on families alone.
Of course, these days, tuition isn’t enough. The cost of living at college has also been creeping up. So under my plan, students who qualify for Pell Grants will be able to use them for living expenses — and middle-class students will get more help to cover their living expenses, too.
We’re also going to make community college free. That’s President Obama’s plan and we’re making it ours. If students start at a community college and transfer to a four-year school, we’ll make sure their credits count and their transition is seamless. And we want more community colleges to offer two-year degrees and certificate programs that are valued by employers — so students know that, if they do the work, they’re in good shape to get a good job.
We’re going to work closely with Historically Black Colleges and Universities and Hispanic-Serving Institutions, because they serve some of America’s brightest students, who need the most support and too often have gotten the least of it.
We’ll offer special help to college students who are parents, because when you help parents get an education, you’re helping their kids, too.
And we’ll make a promise to students who perform national service. If you’re willing to spend years tutoring America’s kids or cleaning up our parks or helping communities hit by disasters, we’ll guarantee that you can attend your public university or college debt-free.”