Since its establishment in 1979 Ministry of Education (Doe) Federal loan policies formed, which in turn have affected the high cost of education and loans to pay for them. While President Donald Trump moves to reduce its size significantly, and ultimately, the Ministry of Energy says, one of the experts says that the entirely private loan system will work better than converting the administration into other government agencies.
“The Clinton administration presented the direct loan program, so this was a kind of competitor to a semi -special system, as the government was now the ones that issued loans, and both systems were a kind of coexistence for a few years, until 2010, when we got Obamacare, and they used some paper profits from converting all loans to government payment, Fox News Digital in an interview.
“Thus, since 2010, we have been exclusively in the governmental region.”
Morning Sun lights up in front of the Ministry of Education building in Washington, February 4, 2025. (Reuters/Kevin Lamark)
Starting, After Trump The administration signed an executive order in the month of March the dismantling of the Ministry of Energy, as it suggested that a 1.6 trillion dollar student loan portfolio transfer to small business administration (SBA). However, recent developments indicate that the Treasury may bear the responsibility of federal students ’loans.
The Trump administration also suggests the transfer of Pell grants and the financing of the first address of other federal agencies, which effectively reduces the role of management in overseeing the main educational programs.
“If we only transfer student loans to the cabinet and we do not change anything else about the system, I do not think this will have any real impact,” Gilin said. “Therefore, all these loan terms are already determined by Congress, and thus simply change the administrative house for those who supervise the papers in the background, this will not have any effect.”
The current system encourages “bad investments” by financing students Or education Without expectation to pay, Jellene said. Instead, the special lenders, who give priority to the risk of payment, are likely to avoid financing such loans. He suggested that moving to a special system will provide better incentives for both colleges and students, as universities will face pressure to produce students who can pay their loans, and students are likely to choose fields that lead to successful jobs.
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Education Minister Linda McMahon speaks with Fox News A broadcaster Brett Bayer after President Donald Trump moved to dismantling her agency. (Fox News / Special Report)
Gillin added that the government has made it difficult to provide student loans through bankruptcy, with only a few exceptions, but this rule does not apply to private lenders.
“There are some things that we can do to encourage lenders from the private sector to be ready to provide these loans. Therefore, one explains how the bankruptcy law works with these income -based loans,” he said.
Some legislators made efforts to address this issue. Democratic actors Steve Cohen and Danny K. Davis, Eric Swalwell, re -submitted Special student bankruptcy lawIn an effort to provide special student loans that cannot be emptied in bankruptcy, similar to other types of consumer debts.
US Education Minister Linda McMahon attends the signing ceremony of the executive order to reduce the size and scope of the Ministry of Education in the Eastern Chamber of the White House on March 20, 2025, in Washington, DC (Chip Somodevilla/Getty Images)
Currently, the government can decorate wages without the need to go through a lawsuit, which makes the process more efficient and less expensive, which will be useful for lenders from the private sector as well.
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The nineties witnessed the entry of income -dependent payment plans, starting with the ICR Planning Plan in 1994 according to the previous one President Bill Clinton. These plans allowed borrowers to pay loans based on their income, expand the loan period and increase the total interest paid. While it has provided immediate financial relief, it also has led to a high long -term cost of some borrowers.
By the fiscal year 2024, The Ministry of Energy was held Nearly $ 1.6 trillion of student loan debts, he issued 85.7 billion dollars in new loans, with $ 45.3 billion to university education and $ 40.4 billion to teaching graduate studies.
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