Since the election of Donald Trump for President, we have heard from many people asking us, “what does this mean for student loan borrowers.” The honest answer is that we do not yet know. We have very little actual information about what the next administration plans, and it is still too early to speculate. The President-elect has indicated that he supports some type of income-driven repayment plan, but without the details, it is hard to say how this will impact student loan borrowers, especially low-income borrowers.
Importantly, some things will not change—at least not in the short term. There is still roughly $1.3 trillion in outstanding student loan debt, and 1 in 4 borrowers are behind. In the past several years, we have made some good gains for low-income student loan borrowers both in access to income-driven repayment options as well as in improvements to consumer protections for borrowers. While, in many instances, the solutions have not gone far enough, we are prepared to defend these gains.
It remains critical that borrowers have access to clear and competent loan servicing that connects borrowers with the options for managing and getting relief from their loans that they are entitled to. As the most recent CFPB report shows, too many borrowers are steered by private collection agencies hired by the Department of Education into programs that may not be right for those borrowers. For example, agencies often steer borrowers into rehabilitation rather than consolidation, but nearly one third of borrowers who rehabilitate their loans redefault within 2 years of getting out of default. Given the draconian consequences of default, the results can be catastrophic for borrowers. This result is unacceptable and we will continue to speak out against incentives to government contractors that do not protect borrowers’ interests.
It also remains critical that companies that violate the law in order to make more profits for Wall Street and wealthy investors are held accountable —especially when their profits primarily come from defrauding students seeking job training in order to better themselves and provide for their families. Trump campaigned on a platform of increasing jobs and fighting systems that were rigged, so we hope he will keep important protections in place ensuring that when schools rig the game and use students to line their pockets with federal student aid, students and taxpayers aren’t left holding the bag.
Regardless of who is in office, there is plenty of work to be done to protect the interests of low-income student loan borrowers. We will continue to do our best to hold whoever is in office accountable for ensuring that the student loan system works for borrowers.