The student debt crisis is a ticking economic time bomb that threatens everyone from young borrowers unable to start families to older Americans facing financial hardship well into retirement. Regular readers know I’ve outlined a two-step plan to defuse the student usury crisis through government debt cancellation and seizing university endowments to pay down remaining balances.
Related: Finding Solutions
Now, with President Donald Trump proposing fines on universities engaged in discriminatory practices, a new opportunity presents itself.
Trump’s plan aims to take institutions to task for race-based discrimination against college applicants by targeting their endowments—a measure that could easily be adapted to address the student debt crisis.
Here’s how Trump’s accountability-driven approach could serve as a template to bring real relief to millions of borrowers …
But first, a quick recap: Federal acquisition of student loans after 2010 shifted 93 percent of the debt onto the US government’s books, putting taxpayers on the hook. Default rates have risen to double digits, with projections as high as 50 percent if left unchecked, potentially costing taxpayers over a trillion dollars.
The solution? First, forgive the student loan debt held by the federal government. Second, use university endowments to fund the remaining balance. With total university endowments sitting at well over $500 billion, a substantial portion of that wealth could make a major dent in outstanding student loan debt.
Trump’s higher education reform plan addresses another injustice, discrimination in academia, by proposing penalties on university endowments. Under the President’s plan, the Department of Justice would prosecute universities engaged in unlawful discrimination, fining these institutions up to the full amount of their endowments. This money would then go toward compensating victims of these crimes.
Related: A Sane and Healthy Society
While the purpose of Trump’s plan is to combat discrimination, it provides an intriguing framework that could be adapted to solve the student loan crisis.
Using the same pattern Trump proposes for punishing racial discrimination, universities can be made to answer for their complicity with industrial-scale usury. This approach would address the root causes of the debt problem and provide much-needed relief. After all, universities charge exorbitant tuition, enabling the crippling debt burdens that have left borrowers in dire financial straits.
How could it work? First, target endowments for debt repayment. Universities with large endowments should bear responsibility for their portion of the student debt crisis. Similar to Trump’s proposed fines for discrimination, a fine on these institutions could use a percentage of their endowments to help offset unpaid student debt. This adjustment wouldn’t even require the drastic step of seizing funds outright, instead imposing fines proportionate to the financial impact of their costly programs.
To make these measures extra palatable, we could focus on universities with a history of predatory pricing. The student debt crisis is partly a result of aggressive tuition hikes by institutions with little regard for the future of their graduates. Universities that benefited most from federal loans could face specific legal sanctions, with fines based on metrics like tuition increases, job placement rates, and loan default rates among alumni.
Of course, the key difference with Trump’s current plan is to distribute fines as debt forgiveness. Much like the President’s proposal to pay restitution for discrimination from endowment penalties, fines imposed on universities could be directed toward student debt forgiveness. This approach would relieve borrowers without transferring costs to taxpayers.
And as debt relief skeptics rightly insist, the final step is thorough reform to prevent future crises. Federal law should mandate that universities cosign student loans, eliminate interest on those loans, or outlaw federal student loan subsidies altogether. Making schools directly responsible for the debt burden they enable would create an incentive to keep costs down and ensure that students are set up for financial success. Statistician to the Stars William M. Briggs floats some additional college reform ideas here.
One of the most common objections to student debt relief is the perceived unfairness to those who’ve already paid off their loans. But using Trump’s plan as a model, universities—many of which have been complicit in creating the crisis through unsustainable pricing and false promises of employment—would bear the cost, not taxpayers or past borrowers.
Moreover, by using university endowments for restitution, we’re not seizing property arbitrarily; we’re targeting the funds of institutions that have directly profited from their students’ financial hardship. The goal here is not to penalize universities but to restore some financial security to borrowers and prevent future generations from falling into the same trap.
For those who balk at the idea of targeting universities, let’s consider the broader perspective. Universities with billion-dollar endowments have largely become untouchable wealth-holders, profiting handsomely from taxpayer-backed loans while offering degrees with increasingly questionable ROI. A fine that makes a real dent in the student debt crisis and compensates usury victims can hardly be called “theft” when these institutions have so long benefited from grave, intrinsic evil.
As for those who argue that debt forgiveness rewards irresponsibility, consider the broader economic implications. Left unaddressed, the student debt crisis will only worsen, leading to billions in taxpayer liability and long-term damage to the economy as young adults postpone milestones like buying homes and starting families.
President Trump’s proposal to fine discriminatory schools’ endowment could open the door to a deeper reform movement in higher education. By adapting a similar policy to address student debt, we can demand that universities take responsibility for their part in this crisis and finally bring relief to those weighed down for decades by unserviceable loans.
Student debt relief doesn’t have to come at the expense of taxpayers or responsible past borrowers. Let’s consider adapting Trump’s plan for the common good, helping millions of Americans break free from the chains of debt while sending a powerful message that we will no longer tolerate predatory practices in higher education.
Get early looks at my works in progress, the chance to influence my writing, and VIP access to my exclusive Discord.
Sign up at Patreon or SubscribeStar now.
Dark fantasy minus the grim plus heroes you can relate to battling vs overwhelming odds
Hear, hear. Those poor students deserve better.
I’ve gotten in plenty of tussles with RWers over this topic. They can’t see beyond “personal responsibility” and would shoot you in the back if you dare attempted to disarm the Bootstrap Bomb.
I remember one time I mentioned loan forgiveness to a RWer and he brought up the “Muh Truckers” counterargument. When I responded what forgiveness actually meant, he pouted and just said “The government would never do that”. Such a non argument. Though we never thought the government would ever have the power to shut the country down for two years under partial martial law, but here we are; yes the government could forgive its own debt.
If Trump could enact this policy to fix student loan debt and also tackle the housing crisis, he’d be a god to Millennials. Those are our two biggest issues currently.
As a side note – jabbing further at RWers sense of economics. They will tell you prices are cheap when the economy is running smoothly, but refuse to take action against anything that would hinder such a status, i.e – stopping politicians from spending all out money, running up the debt, etc. They just say things like that to save face. In practice, their solution is to just bootstrap their way to more money so they can outrun the debt bear that’s chasing us all. They don’t have to make all the money in the world, just more than the next guy.
Briggs is on beam with you, Brian. His post for today.
https://wmbriggs.substack.com/p/fixing-college-hit-them-in-the-money
We can pay it now or pay it later, and pay even more in money, lost time, and lost people.
Boomer’s ideas on “boostrapping” and “pay what you owe” don’t matter anyway. Those are ideas and ideals of the generations prior to Boomers. The Boomers don’t understand the ideals anyway. They are just parroting the words. Time to go around them.
A silver bullet argument against obdurate BoomerCons chanting “Pay back what you borrowed!” is “Agreed. Student debtors will pay back the principle on their loans. Then we forgive the interest and outlaw charging interest on federal student loans going forward.”
That way, not only do debtors pay back what they borrowed – and only what they borrowed – a great many of them will get out of debt instantly, since they’ve already paid back the principle two or three times over.
There’s always the Bipartisan Compromise Idea I think the uniparty is most likely to go with:
1. Transfer all the debt to cishet white male Christians, who obviously took advantage of the system and exploited their BIPOC LGBTQ+ non-male counterparts;
2. Force them to work it off as soldiers, military contractors, and other Empire-boosting or GDP-boosting occupations.
😉
I have begun to imagine all the “personal responsibility” folks in the student debt debate, as people who make their livings selling timeshares.
The other must-do is removing the prohibition on student loan holder form filing bankruptcy. Bankers need some serious skin in the game. That prevents bad paper from being written on students unlikely to finish college.
Amen, though an unfortunate reality is that would be an even harder sell within Trumps own party. Republicans are rather over protective of their banks and businesses.
Sometimes you’ll get a Mammon-worshiping bugman who’ll say, “Actually, student loans can be discharged through bankruptcy.” And he’s technically not wrong. But the economic hardship requirement meant that only about 1 percent of student debtors qualified. Now the criteria have become even stricter, requiring that filers demonstrate *significant* economic hardship.
What does that mean? I asked someone who did manage to get a portion of his college debt forgiven in court. For one, you’ve got to file a federal lawsuit, which costs between $5K-$10K. Then you’ve got to prove to the judge that not only can’t you make your loan payments now; you will _never_ be able to pay off your loan in the future. That pretty much takes producing financial records showing you’ve been under the poverty line for years.
Then, even if you win, you’re only allowed to keep $5K in assets (being forced to sell off everything over that amount at fire sale prices), and your credit is destroyed for 7 years.
Remember that the next time someone says, “Just make the loans dischargeable in bankruptcy.” That’s code for “Just force usury victims to be dirt poor for 10 years and forfeit all of their property except for a used ’08 Hyundai.”
Trump seems very opposed to student loan forgiveness.
We spend a lot of time ribbing republicans and Boomers here. But we also document the power of nostalgia. Is it any wonder why Trump – chronologically a Boomer, and the leader of the GOP – would see himself as a man of the 1980s and view the country through that lens? Neurorigidity is a hell of a drug.
So, with republican AGs already dismantling Biden’s student debt forgiveness initiatives, I don’t expect the GOP establishment to turn over a new leaf now. But as with all the items on Trump voters’ wish list, I’m keeping my expectations low while staying open to pleasant surprises.
The part of President Trump’s speech that got me the most excited was the talk of “eliminating wasteful administrative positions” and in particular “removing all diversity education and inclusion bureaucrats.” It’s hard to overstate just how much money is wasted on such positions. Not just in their salaries; they largely contribute negative work meaning that the actual productive members of the university produce less.
It makes me dream of the administrators getting a visit from the Bobs of Office Space and getting asked “How much time would you say you spend each week dealing with these DEI reports?”