Students, townspeople, and citizens of the world: he’s finally upon us. America’s 45th Commander-in-Chief has officially been sworn into office. After a tempestuous and seemingly endless campaign, countless millions still wonder what the Trump presidency will bring and how his choices affect all of us. American students at St Andrews may feel isolated from the Trump presidency, but those who’ve taken out a federal student loan would do well to take an active interest in what his policy agenda entails.
Student loan debt is every bit as much of an issue in the United States as it is in the United Kingdom. According to a recent article in Time Magazine, Americans now owe more than $1 trillion in loan debt, which exceeds even what’s owed in credit card debt. It’s a crisis that affects two-thirds of recent graduates, who owe on average just north of $35,000 (roughly £28,000) each.
Federal student aid is offered through a complex set of schemes such as Pell Grants and Perkins Loans. The largest is the Federal Direct Loan Program, in which “the U.S. Department of Education is your lender.” This is the only U.S. government program offered by the University, which administers between 250 and 300 federal and private loans to American students annually.
A myriad of repayment plans exists, with timescales ranging from ten years on the standard plan to three decades for some consolidated loans.
Conditions for debt forgiveness are few and narrow, usually being limited to former students whose schools closed before or shortly following graduation, who have worked as teachers in low-income school districts for five years, or whose bankruptcy means that repayment would cause “undue hardship,” among a limited set of scenarios laid out by the Department of Education.
As of this article’s writing, the Trump administration has not made any concrete changes to the programs described above, likely pending the confirmation of controversial Secretary of Education nominee Betsy DeVos. However, promises made on the campaign trail suggest that President Trump may take a surprisingly liberal approach to tackling the issue.
On the campaign trail in October, Trump suggested that “debt should not be an albatross around [students’] necks for the rest of their lives,” and laid out the rudiments of a plan to combat indebtedness. At that time, he indicated that student loan repayments should be capped at 12.5 per cent of a former student’s annual income and that outstanding debts should be forgiven after 15 years.
Then-candidate Mr Trump was often ridiculed and virulently attacked before the general election for his sometimes nebulous and divisive policy proposals. During his first days in office, however, he has followed through on a number of key campaign promises, including withdrawing from the Trans-Pacific Partnership trade agreement and building the much-mocked wall on the US’ southern border with Mexico. Whether Mr Trump intends to accord similar priority to his student debt initiatives is still undetermined, although his tentative proposal flies in the face of Republican efforts to eliminate numerous loan forgiveness programs
This plan is clearly akin to the PAYE and REPAYE plans introduced under President Obama, in which qualifying students would pay a maximum of 10 per cent of their annual income for 20-25 years before their loans were forgiven.
Mr Trump’s comments have been met with widespread approval by the media and the public at large. However, much like his other campaign promises, it is unclear whether he will follow through on it. He has not discussed the plan since his election, and it would likely face opposition in a fiscally conservative Congress.
Other observers expect the Trump administration will see a reduced role for the government in administering student loans. Private lenders have accordingly registered better-than-average performance on the stock market since the November election.
Only time will tell whether his proposal ever is signed into law. Until then, American students will continue to struggle under the burden of debts with no clear end in sight.