School Classroom.
Photo by David Spero/Gallery Stock

Why it’s so hard to believe Trump’s new promises about student loan debt

Before signing a largely meaningless executive order regarding free-speech rights in higher education, Donald Trump spent a little time focusing on student loan debt, which he apparently intends to “fix.”

“I’m going to work to fix it because it’s outrageous what’s happening. You’re not given that fair start. You’re too far down. It’s not right. And we’re going to work very, very hard to get it fixed.

“But we’re going to start with 43 million people in the United States who are currently working to pay off student loans. And we’ll be talking about that very soon. We’re going to work on that very soon. I’ve always been very good with loans and – I love loans. I love other people’s money.”

For the record, the president has never been “very good with loans.” On the contrary, he’s generally been horrible with loans, as evidenced by his multiple bankruptcies, and the fact that most major lending institutions eventually reached the point at which they wanted nothing to do with him.

Regardless, Trump went on to highlight the brutal debt many young people face after getting their diplomas, which is a real issue in need of policymakers’ attention.

What the president may not appreciate is just how little credibility he has on the subject.

As regular readers may recall, Seth Frotman, the top government official overseeing the $1.5 trillion student loan market, announced his resignation last summer in a rather brutal letter to Mick Mulvaney, Trump’s budget director who also controlled the Consumer Financial Protection Bureau (an agency he insisted shouldn’t exist).

Towards the bottom of the letter, Frotman alleged that Trump’s CFPB had uncovered evidence “showing that the nation’s largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees.” Frotman added that the agency’s current leaders, appointed by the Republican president, “suppressed” the publication of a report on the findings.

Several months later, Politico published a story highlighting what Frotman was referring to.

The Trump administration for months concealed a report that showed Wells Fargo charged college students fees that were on average several times higher than some of its competitors. […]

The previously unseen analysis examined the fees associated with debit cards and other financial products provided by 14 companies through agreements with more than 500 colleges across the country.

Wells Fargo provided roughly one-quarter of those accounts but the bank collected more than half of all fees paid by students, according to the report data. The bank’s average annual fee per account was nearly $50, the highest of any provider.

The issue apparently extends well beyond Wells Fargo: the CFPB report documented a series of dubious fees a variety of financial institutions have charged college students, despite regulations intended to prevent the practice.

This would ordinarily be the sort of thing the CFPB would take steps to address. Indeed, it’s one of the reasons Democrats created the agency in the first place. Trump’s CFPB, however, decided not to even disclose the findings to the public.

Now, however, the president wants people to believe he and his team will work “very, very hard” to help young people facing crushing student debt. Given the circumstances, some skepticism is in order.

Donald Trump, Higher Education and Student Loans

Why it's so hard to believe Trump's new promises about student loan debt