Questions for Candidates – Student Debt
The Trump Administration is proposing the elimination of subsidized student loans for low income borrowers. The main advantage of subsidized loans is the government pays all interest while the borrower is enrolled as a full-time student. Do you support or oppose the elimination of subsidized student loans?
The Trump Administration is proposing the elimination of the public service loan forgiveness program. Do you support the elimination of this program? Are there any changes that you would like to make to the public service loan forgiveness program?
The Trump Administration is considering changing the undue hardship provision in the bankruptcy code to allow for some discharges of student debt in bankruptcy? Do you support this idea? What changes to the undue hardship rule would you support?
Chapter 13 bankruptcy payment plans generally treat student debt and other unsecured consumer loans in the same manner. Should Chapter 13 bankruptcy rules be altered to give priority to student debt over other unsecured consumer loans? How would you alter these rules?
The number of Americans over age 60 with a student debt rose from 700,000 in 2005 to 2,800,0000 in 2015. The average amount of student debt held by borrowers over age 60 rose from $12,100 to $23,500 in the same period.[1] What policies are needed to reduce the number of older Americans nearing retirement with substantial student debt?
One recent study revealed that around 28 percent of direct student loans are now Income Based Replacement loans.[2] The study also found the lifetime cost of the IBR loan subsidy for loans originated in 2014 was around $11.0 billion. Is the IBR program the most economically efficient way to assist overextended students?
The Income Based Replacement program is complex. Several loan servicers have been accused of making it difficult to enroll in IBR. Student borrower finances change over time and as a result many students who initially enroll in IBR end up with larger student loan payments. Does this program need to be modified?
Should student loan interest rates be automatically reduced 15 years after repayment is initiated? Would this approach be a more effective way to assist overextended borrowers than Income Contingent Loan programs or other loan forgiveness programs?
Several candidates support laws allowing people to refinance their student debts at lower interest rates. However, many economists believe that interest rates will soon rise. Wouldn’t this proposal be of limited value in a rising-rate environment?
Current student loan interest rates are linked to the value of the 10-year Treasury bond. Do you support changing the student loan interest rate formula to cap potential increases in student loan rates if Treasury rates rise?
Currently lenders do very little underwriting or credit checks on PLUS loans. (Why should they? The loans are insured by the government and not discharged in bankruptcy.) Do you support stricter underwriting standards on PLUS loans to graduate students and parents? Do you support the discharge of PLUS loans in bankruptcy ten years after loan origination?
Do you support debt-free or free four-year public college proposals?
The Tax Policy Center a highly reputable think tank concluded that one free public college program would cost $807 billion over a decade.[3] These cost estimates were based on favorable assumptions – no increase in college attendance, no switches from private to public schools and no tuition increases at public schools. Do you agree with these conclusions? Are cost estimates for your proposal consistent with the work by the Tax Policy Center?
Around 28 percent of students drop out after their first year of college and around 12 percent of first-year students transfer to another institution.[4] Almost half of students with debt who dropped out of college are in default on their student loans.[5] Should programs to reduce debt incurred by first-year students take priority over proposals to spread additional debt over the entire population of students?
Do you support efforts to eliminate debt incurred by first-year college students at four-year institutions? How much should the government spend on such efforts?
Some Articles on Student Debt Policies
Article on Trump Student Loan Programs
https://thecollegeinvestor.com/21636/trump-student-loan-forgiveness/
Where 20-20 candidates stand on student debt?
GOP blocks Warren’s Student Loan Bill
https://thehill.com/blogs/floor-action/senate/217908-gop-blocks-warrens-student-loan-bill
Klobuchar and Baldwin push to lower student debt
http://www.startribune.com/klobuchar-baldwin-push-to-lower-student-debt/378202791/
Bills to help students with student debt sponsored by Klobuchar and Franken
Forbes article on student loan refinance changes;
https://www.forbes.com/sites/zackfriedman/2018/08/09/student-loans-refinance-changes/#6f65764d749b
[1] Source: https://www.documentcloud.org/documents/3319386-201701-Cfpb-OA-Student-Loan-Snapshot.html
[2] Article from New America Foundation on cost of IBR loans. https://www.newamerica.org/education-policy/edcentral/income-based-repayment-cost/
[3] Tax Policy Study includes an assessment of cost of free college proposals. https://www.taxpolicycenter.org/sites/default/files/alfresco/publication-pdfs/2000786-an-analysis-of-senator-bernie-sanderss-tax-and-transfer-proposals.pdf
[4] Statistics on drop-out rates after the first year of college are found here. https://www.creditdonkey.com/college-dropout-statistics.html
[5] A statistic on percent of student who have dropped out in default can be found here. https://lendedu.com/blog/college-dropouts-student-loan-debt/
Authors Note: I have written a book on how a progressive centrist (not an oxymoron in my view) would deal with student debt, health insurance and retirement income. Go here for the book.
Publishers Note: I am taking polls. The current polling question — what is your first choice and second choice candidate for the Democratic Nomination for President — can be found here.
https://docs.google.com/forms/d/e/1FAIpQLSch4lBKZkabruXcyftP6yqt8wjicFQ6BFQzK79gvWLye8qgAg/viewform
or for the latest poll go to the community Policy and Politics.
https://www.facebook.com/groups/441029743334277/