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by Phil Stott | November 14, 2016


Since the election results became clear last week, there's been no shortage of commentary about what we can expect from the soon-to-be-minted Trump administration on everything from foreign policy and defense spending to whether the President-elect will even live in the White House following his swearing-in.

(Much of the speculation, of course, comes from that fact that the results took so many of us by surprise and has provided ample evidence that most of these issues weren't given anywhere near enough coverage during the campaign).

One thread of speculation to add to the pile: student debt. According to the following video from Bloomberg, the share price of publicly-listed student loan providers and servicers like Navient and Sallie Mae rose by more than 20% in the immediate aftermath of the election—a clear signal from the market that it expects President-elect Trump to be less focused on student debt relief than his opponent would have been. As Bloomberg's Shahien Nasiripour puts it in the video, "The Obama administration has demonized these companies. Investors think that that will end once Trump takes office."

Nasiripour also notes that "Donald Trump has said that he wants the federal government out of the student loan business"—a tough call when 9 out of 10 new student loans come from the federal government.

But here's the thing: back in October, the Trump campaign outlined a plan for student debt that the Washington Post dubbed "the most liberal student loan repayment plan since the inception of the federal financial aid program."

Among the policies listed within that plan: higher caps on the portion of a borrower's monthly income than currently exist (the plan proposed caps of 12.5%; the current cap is 10%), and a shorter path to loan forgiveness (the current standard requires 20 years of payments before forgiveness; under Trump's proposed plan, that would be reduced to 15 years).

According to that same Post article, Trump stated in October that "Students should not be asked to pay more on the debt than they can afford. And the debt should not be an albatross around their necks for the rest of their lives." That language was echoed in the recently-released plan of the administration's first 100 days, along with plans to expand "vocational and technical education, and make 2 and 4-year college more affordable."

Which doesn't exactly sound like the kind of signal that suggests privately-held student loan companies are about to enjoy a modern-day gold rush—because without control over the cost of student debt (i.e. federal loans), it's not clear what levers the administration would have to pull on affordability or access.

As such, at this point it seems all but impossible to predict where the next administration's policies will fall on the spectrum, or the likely effect they'll have on everything from ensuring equal access to higher education, to the question of whether rules governing for-profit colleges might be on the chopping block of an administration that has pledged to cut a wide swath through existing regulation. As with so much else, those of with a vested interest in higher education and student debt will simply have to wait and see.


Filed Under: Education|MBA Tags: student debt|video
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