The Left Flip-Flops on Trump’s Student-Loan Reforms

President Trump delivers remarks in Blue Ash, Ohio, February 5, 2018. (Jonathan Ernst/Reuters)
The president’s plan centers on ideas first proposed by liberal activists over a decade ago. Yet now those same activists oppose it.

President Trump’s second budget request to Congress, released yesterday, reiterated his proposal to reform the federal student-loan program. The proposal borrows from an unlikely place: Many of its ideas originated with left-leaning advocacy groups in the 2000s. Yet now that a Republican president champions their stated priorities, those same advocacy groups look askance at their own ideas.

Following through on a campaign promise, President Trump wants undergraduate borrowers who use the income-based repayment program to qualify for loan forgiveness after 15 years of payments. Current policy requires 20 years of payments. In exchange for that reduction in payments, Trump would have borrowers pay a little more each month, 12.5 percent of discretionary income instead of the current 10 percent.

The net effect is a significant reduction in a borrower’s total payments over the life of the loan, which is why the president would limit this new benefit to undergraduates. To offset the cost of this more generous program, graduate students would also have to make the higher monthly payments and would not qualify for loan forgiveness until they had reached 30 years of payments, up from 20.

You might think that at least a few left-of-center advocates would be in favor of this trade. Cutting overall loan payments for undergraduates while increasing them for graduate students seems like an easy thing to get behind. Despite the increase in benefits for undergraduates, left-leaning advocates see the net reduction in aid for higher education in the bill as a non-starter, even if that reduction stems from requiring graduate students to repay more of their debts.

The Institute for College Access and Success (TICAS), a left-leaning advocacy group with close ties to the Obama administration, wrote in a statement that, “The Trump Administration’s proposed budget would push the cost of college even further out of reach for millions of students.” The group concludes stating, “We need a real plan to make college loans pay off for students by investing in scholarships, making loans simpler and more affordable, and closing low-quality programs that leave students with debts and no jobs.”

TICAS has a more complicated relationship with the Trump proposal than this rhetoric implies. In 2006, the group published a compelling paper outlining key principles for reforming the federal student-loan program and offering some specific recommendations regarding income-based repayment.

The paper repeatedly references research by two economists — research that TICAS commissioned — to gauge the affordability of student-loan payments relative to a borrower’s income. TICAS used that research to recommend maximum affordable student-loan payments for various income levels, arguing that loan-repayment plans should be modified to meet those standards.

At the time, the income-based repayment program required payments that exceeded the economists’ standards. But student-loan payments under the Trump proposal are in line with or even below what the 2006 TICAS paper pointed to as affordable:

Here is another recommendation from the 2006 TICAS paper, this one regarding loan forgiveness:

For borrowers with smaller amounts of debt (such as undergraduate borrowing), reduce the number of years of repayment required before forgiveness, perhaps to 15 years.

At the time TICAS made this recommendation, borrowers in the income-based repayment plan received loan forgiveness after 25 years of payments. TICAS apparently thought that timeframe was fine for graduate students but didn’t make sense for undergraduates. The Trump proposal reflects these priorities, proposing forgiveness after 15 years for undergraduates and 30 years for graduate students.

That Trump’s student-loan proposal embodies two major parts of the 2006 TICAS recommendations makes the plan look pretty moderate. So maybe the Left’s change of heart reveals something more troubling about its agenda for higher education: Preserving loan forgiveness for the elite professional class is more important to them than reducing debt burdens for those without advanced degrees.

Jason Delisle — Jason D. Delisle is a resident fellow at the American Enterprise Institute.

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