Pluralistic: Republicans want to force students to pay off scam college loans (30 Apr 2025)


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Republicans want to force students to pay off scam college loans (permalink)

House Republicans have a great plan to pay for Trump's tax-cuts for the rich: jacking up the cost of federal student loans, while eliminating protections for students who are scammed by fake universities:

https://prospect.org/education/2025-04-30-republicans-education-upper-class-privilege-student-loans/

Every GOP legislator and especially Congressional committee chairs are scrambling to find cuts that can offset Trump's plans to make his 2017 tax cuts permanent and then add more cuts on top of that. The failure of Doge to make any appreciable savings has left Trump high and dry, with unfunded tax cuts that will flunk even the most compliant, ass-kissing Congressional Budget Office analysis:

https://www.msnbc.com/opinion/msnbc-opinion/elon-musk-doge-savings-trump-rcna203051

Enter the House Education and Workforce Committee, whose Republican members have found a way to save $330b over the next decade, through the simple expedient of making working families choose between foregoing education for their kids, or burdening those kids with the brutal, crushing debts for the rest of their lives – debts that can't be discharged in bankruptcy, even if the student becomes totally, permanently disabled – not even if the "university" that charged them all that tuition is later shut down for running a scam.

Trump knows a lot about scams in higher ed, of course. His own ill-fated "Trump 'University,'" a fraudulent, non-accredited institution that stole millions of dollars from unsuspecting students:

https://en.wikipedia.org/wiki/Trump_University

Trump U isn't the only scam college out there, not by a damn sight. The Department of Education's "Borrower Defense to Repayment" system allows students who've been scammed by fraudulent institutions to have their debts canceled. That's the clause that the GOP members of the House Education and Workforce Committee plan to kill. This will not only leave fraud victims on the hook for a lifetime of debt – it will also make it easier for scam institutions to re-open and prey upon even more students. The Republicans' giveaway to scam universities kills the "gainful employment" rule that requires that universities prove that their grads can actually get work in the fields they graduate in.

The GOP plan will kill all subsidized undergrad loans, meaning that interest will be piled on student loans while students are still at school, so a grad with a four-year degree will also owe four years worth of compounded interest on their freshman year loans. Undergrad loans are capped at $50k, less than half the price of a degree at most state colleges. The GOP members say that the $50k cap covers the "median tuition" – meaning that it is lower than tuition at half the country's institutions.

GOP members have also called for changes to "income based repayment," with sharply rising payments that will shoot up every time a graduate's income crosses a line. Under this plan, a student grad $10k-$20k would have to pay 1% of their income to service their loans. For each $10k increase in graduate pay, repayment goes up by 1% – so if a grad earning $95k gets a raise to $100k, their repayments will shoot up from 9% of their annual income to 10%. That means a $5,000 raise could leave a graduate $5,000 poorer.

This proposal will roll back Biden-era changes to the interest charged to borrowers on income-based repayment. Under the new rules, interest will continue to compound on your loan even if you're earning peanuts, meaning that the poorest grads will have the highest lifetime interest charges and likely die with unpaid student loans that exceed the principle several times over (remember, the only debt that can be charged against your Social Security is student loans).

The Republican proposal also screws grads working through a Public Service Loan Forgiveness plan, which cancels your student debt after ten years of work in public service. The Republicans want to increase the payments due from grads during that decade of public service. Also, med-school grads would no longer receive credit towards PSLF debt cancellation for the years they spend in residencies, which will drain the supply of freshly minted doctors who staff community health clinics.

They also want to gut Pell grants, changing eligibility to limits grants to "full time" students (30+ hours/week of courses), which will strike hardest at the poorest students, who often attend school part time while working.

Raising the price of a good education and lowering protections against receiving a bad education is an attack on the very idea of education as a source of social mobility. After all, the students most likely to be trapped by a scam college are students from families without a lot of college grads, who lack the means of assessing educational quality.

During the New Deal, America created two parallel paths to social mobility: labor protections and subsidized home ownership. As with every American social initiative, the New Deal was undermined by racism, sexism and xenophobia, and excluded many of America's most disfavored minorities from its benefits. After WWII, two groups of Americans fought the change the New Deal. The wealthy fought to roll back its protections, while the rest of us fought to extend those benefits to Black people, indigenous people, Latino people, women, queers, and others who were left out from the start:

https://pluralistic.net/2024/02/26/horsehoe-crab/#substantive-disagreement

They made a lot of progress, but then came the Reagan revolution, which wiped out labor protections (including defined benefits pensions) and doubled down on home ownership as the only means of securing a comfortable and dignified life. Over the next quarter-century, this turned a lucky group of workers into real-estate millionaires, even as their wages stagnated and the cost of education and health care skyrocketed:

https://pluralistic.net/2021/06/06/the-rents-too-damned-high/

Housing prices also skyrocketed. Of course they did: they only way that owning a house could be an "investment" (as opposed to way to fulfill the human need for shelter) is if the price of keeping a roof over your head went up. But owning an expensive house in a world of stagnant wages and rising health and education costs is a recipe for not owning a house anymore, because you'll have to liquidate that home to cover your bills or get your kids through school. This century hasn't just been a time in which housing grew more valuable (and thus more expensive) – it's been an era in which its easier than ever to be forced out of your home:

https://pluralistic.net/2022/11/06/the-end-of-the-road-to-serfdom/

Trading labor protection for real-estate speculation was always going to end badly for workers. The retreat of organized labor has paved the way for a rollback of all the post-war prosperity, allowing America's oligarchs to create a new Gilded Age where education is reserved for failsons of wealthy families, which is fine, because the rest of us won't need a degree to shine their shoes, clean their toilets, and screw the little screws in on iPhones:

https://www.theverge.com/news/644320/us-commerce-secretary-howard-lutnick-says-well-be-making-iphones-in-the-us

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