By David Lazarus
Los Angeles Times
WWR Article Summary (tl;dr) This article takes a look at President Trump’s campaign proposals to tackle student debt. During the campaign president Trump called for a 12.5 percent income cap on payments and debt forgiveness after 15 years. President Trump also said during the campaign that he’d pay for uncollected student loans by reducing federal spending elsewhere.
Los Angeles Times
President Trump has a pretty good idea.
Although he hasn’t raised the issue since the November election, Trump tackled the growing problem of student debt while on the campaign trail. About 44 million Americans hold roughly $1.4 trillion in student loans, more than is owed for credit cards.
“Students should not be asked to pay more on the debt than they can afford,” Trump said during an October appearance in Columbus, Ohio. “And the debt should not be an albatross around their necks for the rest of their lives.”
His solution: Capping annual student-loan payments at 12.5 percent of income. After 15 years, whatever’s still outstanding would be forgiven.
As is rapidly becoming clear, Trump said a number of things while running for office that, how shall we put it?, had no basis in reality. Exhibit A: his eagerness to release his taxes.
Addressing student debt deserves more serious treatment.
The federal government now accounts for the vast majority of student loans, but the betting is that, under Trump, private-sector lenders and loan servicers will play a greater role. That’s why shares of private loan originator Sallie Mae have jumped nearly 70 percent since the election.
But more action for private companies also means more opportunities for borrowers to be ripped off by unscrupulous firms.
The Consumer Financial Protection Bureau earlier this month joined two state attorneys general in suing Navient, the country’s largest servicer of student loans. A loan servicer collects monthly payments on behalf of banks, the government and other lenders.