Now that Donald Trump has been elected President it’s time to start planning for the new Trump Student Loan Forgiveness Program.
Early indications are the stock market thinks income and profit are going to improve for student loan companies like Navient. Keep in mind the markets are driven by the chance or opportunity of profitability so the way I interpret the market response is that more money is anticipated to be returned to Navient and other private student loan lenders in the form of profit.
Here is the stock performance on the day after the election and you can see the share price rocketed straight up today.
President-Elect Trump has indicated he will take swift action to eliminate executive actions put in place by Obama. The rolling back of these changes is not as far fetched as you might think. According to CNN, “Trump could issue a blanket order that rolls back every executive order Obama signed on the first day of his presidency, if he wanted to. He could also order every agency to begin a process of replacing the rules of the previous administration.”
Some of the federal student loan programs that were created or driven by executive action or orders by President Obama might see these changes with Trump cancellation of Obama’s directives. These include:
- the elimination of the Student Aid Bill of Rights;
- a rolling back of changes in the Pay as You Earn (PAYE) program that capped payments from 15 percent to 10 percent of income;
- reduce Pell Grants back to previous levels;
- move student loan forgiveness back to 25 years from 20 years with income based repayment programs;
- cut back on programs to inform student about income based programs;
- roll back the process to proactively protect borrowers with diabilities;
- reduce student loan consumer protection by rolling back the new standards for student loan servicing;
- eliminate the REPAYE (Revised Pay As You Earn Plan) that was put in place by rules rather than law; and,
- cut the budget of the Department of Education that manages the federal student loan program. Trump is quoted as saying, “We want to bring education local so we’re going to be cutting the Department of Education big league because we’re running our education from Washington D.C., which is ridiculous, instead of running it out of Miami or running it out of the different place that we have so many people.”
However, Trump did say on the campaign trail he hoped to “cap student loan payments at 12.5% of borrowers’ income and would only require borrowers to make payments for 15 years.”
He also expressed a concern that college administrative bloat was unnecessarily causing student tuition costs to rise. But his emphasis on this, like much of his stated plan, has been lacking detail. For example, Trump has been both critical of the cost of regulation driving up tuition and policy analysts have been critical that the lack of regulation allowed tuition to rise.
Ultimately dealing with rising college costs, student loan affordable repayment programs, and radically altering the Department of Education can have big benefits and risks for student considering taking on federal student loan debt for higher education.
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