Trump's Higher Ed Plan: A Template to Relieve Student Debt?
The student debt crisis is a ticking economic time bomb that threatens everyone from young borrowers unable to start families to older Americans facing financial hardship well into retirement. Regular readers know I've outlined a two-step plan to defuse the student usury crisis through government debt cancellation and seizing university endowments to pay down remaining balances.Related: Finding Solutions
Now, with President Donald Trump proposing fines on universities engaged in discriminatory practices, a new opportunity presents itself.Trump's plan aims to take institutions to task for race-based discrimination against college applicants by targeting their endowments—a measure that could easily be adapted to address the student debt crisis.Here's how Trump's accountability-driven approach could serve as a template to bring real relief to millions of borrowers ...But first, a quick recap: Federal acquisition of student loans after 2010 shifted 93 percent of the debt onto the US government’s books, putting taxpayers on the hook. Default rates have risen to double digits, with projections as high as 50 percent if left unchecked, potentially costing taxpayers over a trillion dollars.The solution? First, forgive the student loan debt held by the federal government. Second, use university endowments to fund the remaining balance. With total university endowments sitting at well over $500 billion, a substantial portion of that wealth could make a major dent in outstanding student loan debt.Trump's higher education reform plan addresses another injustice, discrimination in academia, by proposing penalties on university endowments. Under the President's plan, the Department of Justice would prosecute universities engaged in unlawful discrimination, fining these institutions up to the full amount of their endowments. This money would then go toward compensating victims of these crimes.Related: A Sane and Healthy SocietyWhile the purpose of Trump’s plan is to combat discrimination, it provides an intriguing framework that could be adapted to solve the student loan crisis.Using the same pattern Trump proposes for punishing racial discrimination, universities can be made to answer for their complicity with industrial-scale usury. This approach would address the root causes of the debt problem and provide much-needed relief. After all, universities charge exorbitant tuition, enabling the crippling debt burdens that have left borrowers in dire financial straits.How could it work? First, target endowments for debt repayment. Universities with large endowments should bear responsibility for their portion of the student debt crisis. Similar to Trump’s proposed fines for discrimination, a fine on these institutions could use a percentage of their endowments to help offset unpaid student debt. This adjustment wouldn’t even require the drastic step of seizing funds outright, instead imposing fines proportionate to the financial impact of their costly programs.To make these measures extra palatable, we could focus on universities with a history of predatory pricing. The student debt crisis is partly a result of aggressive tuition hikes by institutions with little regard for the future of their graduates. Universities that benefited most from federal loans could face specific legal sanctions, with fines based on metrics like tuition increases, job placement rates, and loan default rates among alumni.Of course, the key difference with Trump's current plan is to distribute fines as debt forgiveness. Much like the President's proposal to pay restitution for discrimination from endowment penalties, fines imposed on universities could be directed toward student debt forgiveness. This approach would relieve borrowers without transferring costs to taxpayers.And as debt relief skeptics rightly insist, the final step is thorough reform to prevent future crises. Federal law should mandate that universities cosign student loans, eliminate interest on those loans, or outlaw federal student loan subsidies altogether. Making schools directly responsible for the debt burden they enable would create an incentive to keep costs down and ensure that students are set up for financial success. Statistician to the Stars William M. Briggs floats some additional college reform ideas here.
One of the most common objections to student debt relief is the perceived unfairness to those who’ve already paid off their loans. But using Trump’s plan as a model, universities—many of which have been complicit in creating the crisis through unsustainable pricing and false promises of employment—would bear the cost, not taxpayers or past borrowers.Moreover, by using university endowments for restitution, we’re not seizing property arbitrarily; we’re targeting the funds of institutions that have directly profited from their students’ financial hardship. The goal here is not to penalize universities but to restore some financial security to borrowers and prevent future generations from falling into the same trap.For those who balk at the idea of targeting universities, let’s consider the broader perspective. Universities with billion-dollar endowments have largely become untouchable wealth-holders, profiting handsomely from taxpayer-backed loans while offering degrees with increasingly questionable ROI. A fine that makes a real dent in the student debt crisis and compensates usury victims can hardly be called “theft” when these institutions have so long benefited from grave, intrinsic evil.As for those who argue that debt forgiveness rewards irresponsibility, consider the broader economic implications. Left unaddressed, the student debt crisis will only worsen, leading to billions in taxpayer liability and long-term damage to the economy as young adults postpone milestones like buying homes and starting families.President Trump’s proposal to fine discriminatory schools' endowment could open the door to a deeper reform movement in higher education. By adapting a similar policy to address student debt, we can demand that universities take responsibility for their part in this crisis and finally bring relief to those weighed down for decades by unserviceable loans.Student debt relief doesn’t have to come at the expense of taxpayers or responsible past borrowers. Let’s consider adapting Trump’s plan for the common good, helping millions of Americans break free from the chains of debt while sending a powerful message that we will no longer tolerate predatory practices in higher education.
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