What Trump’s New Education Pick Means for Student Loans

trump secretary of education

On November 23, President-elect Donald Trump announced his plans to nominate Betsy DeVos as Secretary of Education.

DeVos, a billionaire philanthropist, has been involved in public education for decades, yet has never worked as an educator herself. Here is what her controversial appointment may mean for the state of education and student loans.

Who is Betsy DeVos?

DeVos is the daughter of Edgar and Elsa Prince. Her father was the founder of the Prince Corp., an automobile parts supplier based in Michigan. She graduated from Calvin College, a Christian Reformed Church School.

Like her parents, DeVos is a staunch Republican and has been a lifelong supporter of the party.

She was the chairwoman of the Michigan Republican Party, and her husband ran for governor in 2006 but did not win.

DeVos and her husband have given generously to different charities, particularly those involved in the arts and education. They run the Devos Family Foundation together, which provides funding for pediatric oncology programs, aviation training, and art development initiatives.

What is DeVos’s connection to Trump?

Interestingly, DeVos was not a Trump supporter. Instead, she actively supported Marco Rubio and campaigned aggressively against Trump.

In fact, back in March, she told the Washington Examiner in no uncertain terms that Trump was not her idea of a strong presidential candidate. “I don’t think Donald Trump represents the Republican Party,” she said in an interview.

Despite her deep connections to the Republican party, she has been known to cross party lines for the greater good of education. She even donated to the Clinton Foundation, showing she’s willing to support causes she believes in, no matter where they originate.

What are her views on education?

One of the biggest points of controversy around DeVos is her position on the Common Core curriculum. Some organizations have accused her of being a supporter of Common Core, something she refutes.

“I am not a supporter [of Common Core] — period,” she stated in a November 23, 2016 Tweet.

Some organizations she provided funding to did support the program, but she states that their stance on Common Core was unrelated to her position or choice of donation.

One of her biggest areas of focus is on school choice, signaling that Trump intends to make private selection and voucher programs for low-income families one of the focal points of his educational goals.

That’s sure to raise the ire of teacher unions and public school advocates, who view voucher programs as taking away funding from their schools. But proponents of school choice, like DeVos, say voucher programs give parents and students a valuable voice in the direction of their education.

What will she do about student loans?

DeVos has focused most of her work on the K-12 space, and in fact, has no ties to higher education at all. Not much is known about where she stands on college and student loans, and Trump’s own stances are evolving, too.

Just in October, Trump announced his proposals for reforms to the student loan systems. His plan includes capping income-driven repayment plans at 12.5 percent of borrowers’ income and forgiving the loan balance after 15 years of payments. Currently, the government forgives balances after 20 to 25 years of qualifying payments.

Trump has also said he will hold schools accountable for reducing tuition costs and would institute a system that allows private institutions to manage lending.

To date, DeVos has not publicly commented on Trump’s proposals. But DeVos has campaigned heavily in Michigan for the privatization of many aspects of education, including voucher programs and charter schools. It is likely that she would support the privatization of student loans as well.

The Senate Committee on Health, Education, Labor, & Pensions seems optimistic that DeVos will make headway on student loan and education reforms. On November 23, Senator Lamar Alexander, a Republican and the chair of the committee, posted on Twitter that he looked forward to working with DeVos:

“I also look forward to working with her on the upcoming reauthorization of the of the Higher Education Act, giving us an opportunity to clear out the jungle of red tape that makes it more difficult for students to obtain financial aid and for administrators to manage America’s 6,000 colleges and universities.”

Looking ahead

DeVos is a bold choice, given that she has no experience in higher education and yet will be responsible for overseeing $127 billion in annual federal student loans and the Pell Grant program.

Though her views on student loan debt are not entirely known at this point, based on her history we can guess she will be an advocate for more choice and privatization.

For more about Trump’s potential impact on your finances, check out this article on how his election affected market rates.

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Published in Federal Loan Servicing, News

  • It will be interesting to see how the Trump administration and DeVos handle Public Service Loan Forgiveness. Some have been worried that it will be discontinued once 2017 comes and many loan recipients will benefit from it. Personally, I think it will stick around. If it didn’t, there would be a PR nightmare for the Trump administration. It’s a great benefit to those that work in public service.

  • Gandhi

    Privatization is another way of saying profitization. The capitalists who rule want to get a cut of activities, which, in my liberal belief, would be better served by remaining completely under government control (and cheaper, too!). The areas under attack by the right are education, the military, public housing and prisons. The strategy used to obtain profit is to get assured, tax-mandated, payments from the public. If given the chance the neo-cons would even profitize Social Security. It is my judgement that greed has hollowed out our liberal democracy in favor of the wealth-elite that forms our Oligarch. The think tanks are working their brains out writing rubber stamp legislation favoring the elites for the public officials that they “own” to sign! Ex-governmental types run right into lobbying positions and lucrative private jobs when they depart government service.

  • I think that it should all be privatized and subject to the rules of capitalism. Competition will drive fees and interest rates down while making getting a student loan the same as getting any other loan. If we can filter out people who cannot handle debt from the system, there will be few defaults, and our your will learn to be responsible with money at a much younger age. Not ‘here’s 100 grand, have fun! Default later” situation that we have now.

    That should create a scarcity of education dollars and student, meaning that universities will need to watch their bottom line and run much leaner than they currently do. With costs down, the need for loans will decrease, more people will be able to afford an eduction, and you will get a flywheel effect the continue to lower costs and increase availability of an education to our population in general.

    No matter which way education funding is handled, it has to be all-in. Either all capitalism with no government funding, or all government run – the US gov owns the schools, pays the faculty, etc . Students go to free with no financial obligations, with the tax payer picking up the bill as is done in other countries.

    If you mix it up with some private and some government components, it just doesn’t work. Private and political entities will mess with the system for their own gain, and you get what we have today – a mess. The private sector will mess up and let the government bail them out ( housing bubble, student loan forgiveness, subsidized loans , etc ) and the government will toy with it to get votes “look, I revamped the student loan program again! Vote for me!” Did either of you fix anything? No? Come back when you have.

  • I think that it should all be privatized and subject to the rules of capitalism. Competition will drive fees and interest rates down while making getting a student loan the same as getting any other loan. If we can filter out people who cannot handle debt from the system, there will be few defaults, and our your will learn to be responsible with money at a much younger age. Not ‘here’s 100 grand, have fun! Default later” situation that we have now.

    That should create a scarcity of education dollars and student, meaning that universities will need to watch their bottom line and run much leaner than they currently do. With costs down, the need for loans will decrease, more people will be able to afford an eduction, and you will get a flywheel effect the continue to lower costs and increase availability of an education to our population in general.

    No matter which way education funding is handled, it has to be all-in. Either all capitalism with no government funding, or all government run – the US gov owns the schools, pays the faculty, etc . Students go to free with no financial obligations, with the tax payer picking up the bill as is done in other countries.

    If you mix it up with some private and some government components, it just doesn’t work. Private and political entities will mess with the system for their own gain, and you get what we have today – a mess. The private sector will mess up and let the government bail them out ( housing bubble, student loan forgiveness, subsidized loans , etc ) and the government will toy with it to get votes “look, I revamped the student loan program again! Vote for me!” Did either of you fix anything? No? Come back when you have.