Student loans are back in the headlines as the Trump administration moves to resume collections on delinquent federal student debt.
The issue demands serious scrutiny. Borrowers should honor their obligations. Yet the federal government has become the world’s largest predatory lender, handing tens of thousands of dollars in debt to teenagers who often lack the financial literacy to understand what they are signing. No underwriting process checks their ability to repay. Unlike most other loans, student debt cannot be discharged through bankruptcy.
The Trump administration should shift its collection stance and seize the opportunity to reform the broken student lending system.
This corrupt setup has enriched colleges, universities, and their administrators while leaving young people burdened with worthless degrees and mountains of debt.
With an entire generation saddled by debt and losing faith in the American dream, the Trump administration should lead a bold reform effort to fix student lending.
A five-step plan
First, Trump should work with Congress to get the federal government out of the student loan business entirely. The government is not a bank. Borrowing money at the federal level only to shovel it out to unqualified borrowers is reckless and unsustainable.
Next, the administration should pressure universities — particularly nonprofits with massive endowments. To maintain their tax-exempt status, these institutions must justify the return on investment for their degrees, hold a stake in the loans, and offer refunds for programs that fail to deliver promised outcomes.
If a student pursues a degree leading to a $50,000 salary, a college should warn them that taking on $200,000 in debt will never produce a worthwhile return. Aligning financial incentives would push schools to prioritize real-world job skills over administrative bloat and ideological indoctrination.
Student loans should also undergo an underwriting process based on both the student’s academic aptitude and the projected market value of the degree they are pursuing. Loans for high-value degrees should be higher than those for low-value ones, forcing colleges to stay competitive. Loans should also be restricted from funding noneducational expenses like spring break trips.
Additionally, student loans should become dischargeable through bankruptcy, just like other forms of personal debt. Colleges that hold a portion of the loan would then share the risk, giving them a stake in student success.
Finally, outstanding student loans must be restructured. Interest payments already made should be applied toward the principal, and students should have the right to seek recourse against universities that saddled them with overpriced, low-value degrees.
Trump’s big opportunity
The Trump administration has already welcomed many young Americans into the center-right coalition. Tackling the real crisis of college debt — an industry siphoning wealth from the next generation while pretending to offer economic opportunity — would show young voters that conservatives stand for their future.
Fixing student lending is not only good politics; it is the right thing to do to preserve the American dream for everyone.
Opinion & analysis, Student loan debt, Student loan forgiveness, College, Universities, Degree, Jobs, Employment, Congress, Donald trump, Lawsuits, Carol roth
