As another school year begins, college students across the nation will invest in their educations and apply for student loans. Recent numbers put total U.S. student debt at an all-time high of more than $1.5 trillion, debt that has more than doubled in the last decade and now surpasses credit card debt. But unlike credit card debt, student loan debt is nearly impossible to discharge in bankruptcy. Instead of taking action to address this growing crisis, the Trump administration has undermined student borrower protections at every turn.
In the past year alone, the Trump administration has repeatedly taken aim at agencies helping students. The administration continues to undercut the Consumer Financial Protection Bureau (CFPB), which ensures student loan servicers maintain fair standards and supports students in resolving loan complaints. In September 2017, the Trump administration left 44 million student loan borrowers more susceptible to fraudulent debt collection practices by severing ties between the Department of Education and CFPB. The move eliminates interagency enforcement action efforts and increases unnecessary regulatory complexity.
In May, the CFPB, at the directive of Interim Director Mulvaney, folded its Office of Students and Young Consumers into the Office of Financial Education. This shift limits federal enforcement of student loan protections, despite the fact that the dedicated student loan office had helped return hundreds of millions of dollars to students.
The administration is also rolling back regulations on predatory, for-profit universities. In October of last year, 18 attorneys general sued Secretary DeVos for neglecting to follow the gainful employment rule, which prevents predatory for-profit college programs from receiving federal financial aid funding.
Secretary DeVos ultimately dismissed the rule entirely, leaving for-profit colleges free to offer programs with limited transparency and exorbitant price tags. Later, in December, the Education Department decided to yank relief from students defrauded by the now-defunct Corinthian Colleges, proposing to cut student loan repayment assistance by 60 percent.
More recently, Secretary DeVos has taken steps to make it more difficult for defrauded student borrowers to seek default relief. A proposed rule would require students to prove that colleges knowingly and intentionally deceived students if they want their public federal loan(s) cancelled. The move would shift the burden of proof, and potential legal costs, onto borrowers and would shorten the time window that students have to apply for relief.
Dwindling support for student loan borrowers has real consequences for the economy. Federal Reserve Chairman Jerome Powell recently indicated that mounting student debt may be undermining long-term economic growth, and research shows that student loan burdens could stifle entrepreneurship and reduce home ownership. The lack of safe, affordable loan options prevents students from building new skills and moving up the economic ladder.
Given this backdrop, the Trump administration and Congressional Republicans should focus on supporting students on their educational journeys, instead of weakening protections that allow access to safe and affordable loans. Undermining students makes it more difficult for the next generation of American workers to attain a quality education and secure financial freedom in the workforce.
