Trump says that one of the biggest questions he gets from people in college is about student loans. In an interview with The Hill last July, the Donald expressed dismay that people who are doing well in college also have “student loans up to the neck.”
Trump also said that when he visits college campuses, students approach him and ask him for a job. The real estate mogul is certainly in a position to hire people because he owns so many businesses.
However, he prefers to help students in another way. He’d like to make student loans more affordable for them.
Trump is also alarmed that students work hard for four years and get good grades only to be saddled with a mountain of debt.
His concerns aren’t without merit. According to the Government Accountability Office (GAO), approximately $100 billion of the more than $1 trillion in student loan debt is in default.
Credit cards for students and student credit card scams are also contributing factors to the amount of money that many college graduates owe. The pile of debt can be overwhelming, especially to people who can’t find a job.
Trump also said that, if elected president, he’d create an economy that will make it easier for college grads to get good jobs so that they can pay down those loans.
Although Trump is a Republican, he shares one trait with outspoken Democratic Senator Elizabeth Warren. He doesn’t believe that the federal government should earn a profit from student loans. In fact, Trump went on record to say that it’s “terrible” that the government has turned the student loan program into a profit center.
It should be noted, though, that there is some debate about whether or not the federal government makes money on student loans. Although the government takes in more money than it disburses with the federal loan program, there is more to the story.
According to the Congressional Budget Office (CBO), the federal government stands to make $135 billion over the next decade from the four biggest student loan programs. So, helping students pay for college is actually a winner for the taxpayer because it reduces the debt, at least according to one analysis.
However, some people say that the federal government is using funny math to count those figures. In fact, the CBO itself has suggested what it calls a more “comprehensive” approach to calculating the cost of the student loan program. Using that method, student loans actually contribute $88 billion to the national debt over the next ten years.
In other words, even though the government is trying to operate the student loan program as a profit center, it’s still losing money.
Why? Because the more comprehensive accounting approach takes into account “market risk.” That’s the possibility that more people will default on their loans when the economy turns south (sadly, it will again). Since the government still offers student loans at a low rate while ignoring market risk, it stands to lose money.
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