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Since its founding in 1979, USA Department of Education (Doe) He shaped the federal policy of the student loan, which in turn influenced the growing costs of education and payment loans. While President Donald Trump starts a significant reduction and eventually closed, one expert says that a completely private loan system would work better than switching administration to other government agencies.
“Clinton’s administration introduced a direct loan program, so this was a competitor in the quasi-printing system, where the government was now releasing loans, and both systems were koegzist for several years, until 2010, when we received Obamare, and which basically used to be conducted in the Government in the Government.
“And so, since 2010, we have been to the Government’s loan exclusively the area,” he added.
The morning sun is shining the front of the Washington Education Department, February 4, 2025. (Reuters/Kevin Lamarque)
Initially, After Trump She signed an executive order in March, which dismantled Doe, the administration suggested the transfer of a student loan portfolio of $ 1.6 trillion in the administration of small businesses (SBA). However, recent movements indicate that the Ministry of Finance may take responsibility for federal student loans.
Trump’s administration also proposes to convey Pell support and funding for titles and other federal agencies, effectively reducing the role of the department in the supervision of the main educational programs.
“If we just transfer the student loans to the treasury and change nothing else about the system, I don’t think that would have a real impact,” Gillen said. “So, all these conditions of the loan is already setting up a congress, so it simply changes the administrative home who monitors the paperwork in the background, it will not have an impact.”
Current system stimulates “bad investment” by funding of students or education Without a realistic expectation of repayment, Gillen said. Instead, private lenders, who give a priority to the risk of repayment, would probably avoid financing such loans. He suggested that the transition to the private system provides better incentives for both colleges and students, as universities will face pressure so that students who can repay loans, and students would more likely choose fields that lead to a successful career.
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Linda McMahon’s education secretary is talking to the main political anchorage of Fox News Bret Baier after President Donald Trump moved to the dismantling of his agency. (Fox News / Special Report)
The government made it difficult to release the student loans to the bankruptcy, Gillen added, with only a few exceptions, but this rule does not apply to private borrowers.
“There are a few things we can do to encourage private lenders to be basically ready to give these loans. So one clarification is that the bankruptcy law works with these loans aimed at income,” he said.
Some legislators have made efforts to deal with this issue. Democratic tail. Steve Cohen, Danny K. Davis and Eric Swalwell have introduced again The Law of Righteousness of Private Student Loantrying to make private student loans that can be released in bankruptcy, similar to other types of consumer debt.
Student loans, Pell Grants will continue despite reducing the education department, says an expert
The US Minister for Education Linda McMahon participates in the Ceremony of the Executive Order Signing to reduce the size and scope of the education department in the Eastern Room of the White House on March 20, 2025. In Washington, DC (Chip Somodeville/Getty Images)
Currently, the Government can decorate wages without the need to go through a lawsuit, making the procedure more effective and cheaper, which would also be useful for private lenders.
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In the 1990s, it recorded repayment plans focused on income, starting with the repayment plan (ICR) compared to income in 1994 President Bill Clinton. These plans have made it possible for loans to restore loans based on their revenue, extending the loan deadline and increasing the total paid interest. Although they have given the current financial relief, they have also led to higher long -term costs for some borrowers.
To the Fiscal year 2024, Doe held Approximately $ 1.6 trillion dollars of a student loan, issuing $ 85.7 billion in new loans, with $ 45.3 billion assigned to undergraduate education and $ 40.4 billion for graduate education.
