May 06, 2017
Susan Dynarksi had a very good piece in the NYT Upshot section on several measures from the Trump administration which will allow the financial industry to collect larger fees from student loans. However, the piece errs in describing the changes as being “deregulation.” Rather these changes are ways in which the government is deliberately choosing not to enforce contracts in ways that increase corporate profits at the expense of student borrowers.
Suppose that the government announced that it was going to stop making efforts to verify income among people applying for food stamps. In fact, suppose it decided to no longer even verify the number of children an applicant was claiming. Would anyone consider this move “deregulation?”
This is comparable to what the government is doing in reference to the firms involved in the student loan repayment process. The purpose of the loans is make it easier for kids from low- and middle-income families to attend college. The government is supposed to design contracts that fill this purpose at the lowest cost to both the government and the students.
The measures being taken by the Trump administration are not likely to lower costs for the government and are almost certainly going to raise them for students. In effect, it is making the contracts more advantageous to the financial industry by subjecting students to higher fees.
Calling this “deregulation” might lead readers to believe there is some principle at stake here. There isn’t. As with most of the actions of the Trump administration, the only principle is giving more money to the rich and powerful.
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