Trump says student loans will be handled by Small Business Administration

Discussion in 'General Distance Learning Discussions' started by Tireman 44444, Mar 21, 2025.

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  1. Tireman 44444

    Tireman 44444 Well-Known Member

  2. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    I'm a little surprised he hasn't announced that the federal government will stop making new loans altogether.
     
    Bill Huffman likes this.
  3. Dustin

    Dustin Well-Known Member

    diznee.jpg
     
    NotJoeBiden and Jonathan Whatley like this.
  4. TEKMAN

    TEKMAN Semper Fi!

    Honestly, it might be a good thing. Taking a student loan for college is like taking a loan to start a business. Who knows the it is hard to get student loans, colleges start to decrease their tuition and fees.
     
  5. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    They didn't say that a move to the SBA would change federal student loan programs to only lend to creditworthy borrowers. If it does, then I agree, just let the market do it.
     
  6. NotJoeBiden

    NotJoeBiden Well-Known Member

    Again, every other developed nation has figured higher education out, and the solution was never to further privatize education.
     
    Bill Huffman and Suss like this.
  7. Rich Douglas

    Rich Douglas Well-Known Member

    The loan market is based on borrowers' current ability to repay. Student loans are based on borrowers' future ability to pay. For the market to address that sector, they'd have to charge usury-level rates.
     
  8. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    That assumes that in a competitive market for student loans, lenders believe that earning a degree has no positive effect on people's ability to repay. In practice we'd expect to see which school and which major pay a significant role in determining rates, and we'd expect to see schools work with particular lenders to negotiate rate cuts for their students.
     
  9. Bill Huffman

    Bill Huffman Well-Known Member

    Trump has changed his mind. He’s decided to keep Department of Education and continuing processing those loans there.

    Why do I feel that he doesn’t think through his decisions?
     
  10. Tireman 44444

    Tireman 44444 Well-Known Member


    Sigh
     
  11. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Not sure whether it's dementia, he's flooding the zone, or (my guess) some of each.
     
  12. Garp

    Garp Well-Known Member

    Can you post a link to the story. When I search all I can find is the SBA story.
     
  13. Rich Douglas

    Rich Douglas Well-Known Member

    No other loan situation takes into account one's education or potential earning power. It's all about the present.
     
  14. Rich Douglas

    Rich Douglas Well-Known Member

    I don't think he does. I think his staff does...after the fact. That's why they're going around cleaning up after him almost every day.
     
  15. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    No other loan situation inherently leads to to the borrowers' improved ability to repay, either. Different loans have different rates for different reasons, such as mortgages and car loans being lower than credit cards for being collateralized, etc. And credit card companies will offer a lower introductory rate for balance transfers in part because they know the borrower is trying to become more creditworthy. (Yes, also because they're thinking long term, that's why I said "in part".)
     
  16. NotJoeBiden

    NotJoeBiden Well-Known Member

    A college loan doesn’t necessarily do that either.
     
  17. Garp

    Garp Well-Known Member

    Can you provide a link to the story. All I can find is the SBA transfer not that he changed his mind.

    Apparently, according to one story income adjusted payment ended so one attorney said her payments went from $500 a month to $2400 a month. She is suing the Department of Education and the Secretary.
     
  18. Bill Huffman

    Bill Huffman Well-Known Member

    Thank you for pointing this out!

    I apologize, I think the breaking news article I read must have had their signals crossed. Sorry I can't find the exact article I first read. Here's an article about the situation. It's a very recent article on the topic.

    Trump Says Student Loan System Is Moving To The SBA — But It May Face Legal Challenges
    quote:
    As the President was signing the order, White House press secretary Karoline Leavitt told reporters, “When it comes to student loans and Pell Grants, those will still be run out of the Department of Education."
    https://www.forbes.com/sites/adamminsky/2025/03/21/trump-says-student-loan-system-moving-to-sba-jeopardizing-loan-forgiveness-and-repayment-programs/

    I don't care if this stuff is handled by the Department of Education or even if there is a Department of Education. I just think taking a chainsaw to government is a really bad idea. That technique will more likely work on an organization like Twitter with a few thousand employees but not on a huge organization with millions of employees like the federal government. This is being done without first figuring out the details of what the organizations are really responsible for and what the people are doing. I don't believe Trump and Musk are really interested in cutting fraud and waste. This is shown by the fact that their first order of business was firing all the Inspector Generals. It is the job of the Inspector Generals to eliminate fraud and waste. They were fired instead of being consulted with on how best to cut fraud and waste in their departments. They weren't even talked to before they were fired!
     
  19. SteveFoerster

    SteveFoerster Resident Gadfly Staff Member

    Not necessarily, but lenders base decisions on borrower profiles rather than a supernatural ability to predict the future, and it's why I said that "In practice we'd expect to see which school and which major pay a significant role in determining rates".

    What I'm suggesting here just isn't that outlandish.
     
  20. Tireman 44444

    Tireman 44444 Well-Known Member

    What could happen to financial aid without the Department of Education

    President Donald Trump has officially moved to dismantle the Department of Education, but said federal funding for core programs, including Pell Grants and student financial aid, will be unaffected. The president cannot unilaterally abolish a federal agency without the approval of Congress. However, in the executive order signed Thursday, he instructed Secretary of Education Linda McMahon "to the maximum extent appropriate and permitted by law, take all necessary steps to facilitate the closure of the Department of Education."

    What could happen to financial aid without the Department of Education
     

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