Trump takes on student loans

Crooked admissions schemes aren’t the only problem plaguing colleges and their students these days. The cost of a degree from a private college continues to rise, moving well beyond what most families can dream of paying, even with financial aid. Most colleges assume students will take out loans to make ends meet, and they figure that borrowing into their calculations when they make financial “awards.”

As a result, Americans ages 19 to 29 have amassed $1 trillion in debt, according to a February report by the Federal Reserve Bank of New York.

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The biggest debt holders are not the students who attend the nonprofit and public institutions that dominate in higher education, but those who go to for-profit colleges. These students account for only about 13 percent of all college students, but they are responsible for more than half of all student loan defaults. One reason for the high level of defaults is that many for-profit colleges promise students far more than they deliver in marketable skills, leaving them without the careers they had expected.

For better and worse, President Trump addressed both of these issues in a plan for higher education announced last week. The details are sketchy, but there are enough good ideas to start a discussion.

Among the most promising requests by the administration — requests, because they would need congressional approval — are the ones that would streamline both the application and repayment for federal student loans. There would be one income-driven repayment plan for each level of higher education: Undergraduates would pay 12.5 percent of their discretionary income for 15 years; anything unpaid at that point would be forgiven. But graduate students would pay for 30 years at the same rate, five years longer than they currently do. Borrowers would also receive more financial aid counseling at the front end, so that they understand the terms of their loans, enabling them to make more informed financial decisions.

Of more concern is the proposal to limit how much graduate students can borrow in federal loans; there is currently no restriction. The goal is partly to reduce some of the crushing debt. The administration also hopes that if graduate students can’t borrow up to the full cost of the program, as they can now, graduate schools will have less incentive to raise prices.

The effect of this change on students, however, could be drastic, especially for low-income students. Rather than reducing their borrowing, many students and their families would probably turn to private, rather than federal, lenders. And low-income families might not be able to get these loans at all.

Another proposal on the Trump administration’s list would allow Pell grants for people leaving prison.

Another would establish short-term programs to train people for vocational certificates and licenses rather than degrees. That’s fine, as long as they’re legitimate job-training institutions, not like the many for-profit colleges that have persuaded students to take loans they can’t afford for programs that don’t lead to jobs.

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Trump’s emphasis on efficient, short-term vocational training is welcome; not everyone needs to go to college. But loans should be provided only for accredited programs with strong records of sending their students on to successful careers.

— Los Angeles Times

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