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One advocate said privatization "will limit access for students from the most underrepresented communities, raise borrowing costs, and eliminate vital protections that current federal borrowers rely on."
The Trump administration is reportedly weighing the privatization of federal student loans, fulfilling yet another Project 2025 agenda item.
Politico reported on Tuesday:
Trump administration officials are exploring options to sell off parts of the federal government's $1.6 trillion student loan portfolio to the private market, according to three people familiar with the matter.
The discussions have taken place among senior Education Department and Treasury Department officials and have focused on selling high-performing portions of the government's massive portfolio of student debt, which is owed by about 45 million Americans.
Since retaking office, Trump has already enacted numerous changes to student loan policy that have squeezed borrowers, including resuming wage garnishments for millions of borrowers with overdue debt payments after a five-year reprieve.
Meanwhile, he has slashed programs that helped those in debt pay their loans. These include the Biden-era Saving on a Valuable Education (SAVE) Plan, which provided payment assistance to over 8 million student debtors based on income level. The One Big Beautiful Bill Act (OBBBA) set the SAVE program to formally shut down in July 2028, giving borrowers until then to find a new payment plan.
With little notice, the administration also paused forgiveness from the Income-Based Repayment (IBR) system, which was established in 2007 and enabled 2 million more borrowers to pay rates pegged to their income, with the promise of forgiveness after 20 to 25 years.
The OBBBA included a total $300 billion worth of cuts to higher education programs, primarily through federal student loans.
As Persis Yu, the deputy executive director and managing counsel at the advocacy group Protect Borrowers, explained, this included "the elimination of certain loans for graduate students, new annual and lifetime limits on federal loans for parents, cuts to Pell Grant eligibility, and new, stingier repayment options that will spike monthly costs and push borrowers further into debt."
The idea of bringing in private consultants to determine the value of the government's debt holdings and selling some student loan debt to private investors was floated during the first Trump term, but never came to fruition. However, this idea was fleshed out more thoroughly in the Heritage Foundation's Project 2025 playbook, which states that "student loans and grants should ultimately be restored to the private sector."
While details of how exactly the administration may plan to sell off this debt are scarce, critics have warned that privatization will put even more borrowers in precarious situations.
"Private student loans generally have more onerous repayment terms than federal loans, lacking options such as Income-Driven Repayment and often limiting and imposing fees for the use of forbearances," Yu said. "Private loans also lack vital cancellation protections found in federal student loans, such as disability and death discharges, or Public Service Loan Forgiveness."
"Private loans will not merely replace federal student loans," she continued. "Instead, they will limit access for students from the most underrepresented communities, raise borrowing costs, and eliminate vital protections that current federal borrowers rely on."
Private loans are also more rife with abuse. According to the Century Foundation, while private loans account for just 8% of all student loan debt, they have accounted for more than 40% of student loan-related complaints to the Consumer Financial Protection Bureau. One third of those complaints come from borrowers who say they are unable to afford their monthly loan payments.
At the same time, even while the Trump administration claims privatizing debt would save money for taxpayers, Preston Cooper, a senior fellow at the conservative American Enterprise Institute, told Politico that savings would likely be minimal because investors would be unlikely to pay more for the loans than they are worth.
"The only way for [Trump's plan] to make economic sense is to structure the deal in a way that really short-changes borrowers," said Eileen Connor, executive director of the Project on Predatory Student Lending.
Yu says that the goal of privatization rests on a faulty premise: "The argument that free markets will control the cost and improve the quality of higher education underestimates the harm that can be caused by setting private lenders loose on students and fundamentally misunderstands the relationship between these market participants. In a debt-financed higher education system, students are not the consumer; they are the commodity."
Sara Partridge, associate director for Higher Education Policy for the Center for American Progress, said, "Once again, this Administration seeks to line the pockets of private companies at student borrowers’ expense while moving away from a system that provides consumer protections under the law."
This compact goes against every democratic principle our country and our schools should uphold, and we reject the Trump administration’s attempt to cajole universities into compliance through explicit bribery.
We are students at the nine universities most recently targeted by President Donald Trump. We've spent years demanding that our universities improve conditions for students, lower tuition, and create spaces for the free exchange of ideas. No one told us the way to influence our universities was simply to bribe them with millions of dollars of federal funding.
On October 1, the Trump administration sent our schools a 10-point memo titled "Compact for excellence in higher education." If adopted, the compact would limit international student enrollment, force universities to share student information with the federal government, enforce the adoption of a specific definition of gender and threaten affinity spaces, and take action against actors that “punish, belittle, and even spark violence against conservative ideas.” In return, our universities are promised increased access to federal funding opportunities. If they don't comply? Well, any school can “elect to forgo federal benefits.”
This compact goes against every democratic principle our country and our schools should uphold, and we reject the Trump administration’s attempt to cajole universities into compliance through explicit bribery. It should go without saying that extorting universities to comply with ideological demands and quell freedom of speech is antidemocratic, but here we are.
In a public statement, White House Official May Mailman claimed that our nine universities—Brown, the University of Texas at Austin, the University of Arizona, Dartmouth, MIT, the University of Pennsylvania, Vanderbilt, the University of Virginia, and the University of Southern California—were chosen because they are "good actors." In other words, the Trump administration expects our universities to fold. And they expect to use our compliance as a green light to force universities across the country into similar agreements.
If any one of our universities agrees to this compact, it risks creating a chain reaction for the higher education system at-large to side with tyrants over students.
Here's the thing—we cannot deny that Trump's compact pointed out some very real issues in our higher education system. It is true that "too many young adults have become saddled with life-altering debt." It is true that "truth-seeking is a core function of institutions of higher education." For decades, young people have borne the brunt of our country's refusal to invest in education. As federal funding has fallen, administrator salaries have ballooned while faculty, staff, and graduate worker wages have stagnated and tuition prices have skyrocketed. Today, many of our schools are run more like hedge funds than like centers of learning. That's why we have continuously demanded that our government and our universities make higher education more accessible, and allow us to freely share our viewpoints on campus.
Trump's memo, however, does not actually sincerely seek to confront these issues. It is a thinly-veiled attempt to undermine fundamental principles of university independence and attack vulnerable students, and it is a clear instance of authoritarian overreach. Trump claims to value "truth-seeking," yet limits what "truth" can be sought. The compact places surveillance on what ideas can and cannot be present in the campus setting, requiring screening of international students for "anti-American" values. Under the guise of promoting campus discourse, it gives institutions the tools to gut departments that the Trump administration could frame as "belittling" conservative ideas. What counts as an "anti-American" value or "belittling" conservative ideas is malleable to the Trump administration's vantage point. The compact also effectively bans peaceful campus protest, a crucial part of civil discourse on our campuses.
To define a "free marketplace of ideas" by its adherence to a specific set of ideas and exclusion of a specific set of individuals is not creating a free marketplace at all: It's breeding authoritarianism.
This compact also asks our universities to commit to repression of LGBTQ+ students, including "biological" definitions of sex and gender, that would strip our queer students of protections and resources crucial to their right to a free and safe education. For LGBTQ+ students, this compact is not just a "political" attack; it is an immediate threat to our education and survival.
And this comes after a speech-chilling effect has already taken over our campuses. Students who dared to speak out in support of Palestine, especially, have faced extreme repression on campus, including police sweeps, expulsions, and attempted deportations. Over the summer, we watched as Brown University and the University of Pennsylvania signed agreements that sold students' personal information to the Department of Justice, excluded trans students from university life, and stripped them of their healthcare. We watched as the University of Virginia acquiesced to the Department of Justice's demands to dissolve diversity, equity, and inclusion offices against the wishes of the university community and forced President Jim Ryan to step down. We've watched our peers, Mahmoud Khalil and Rumeysa Öztürk, taken for daring to speak against Israel's genocide, and we continue to watch as Immigraton and Customs Enforcement takes our community members on and near our campuses.
The founding principles of our universities—quality education free from censorship, workforce development, and shared governance of university structures—have been under attack for decades. The solution is not to take a bribe from a wannabe-dictator who wants to trojan-horse exclusionary policies under the guise of protecting American students. The solution is to listen to the students, faculty, and staff who actually make our schools run.
This memo was sent out during a government shutdown. While key government programs are stopped and unknown numbers of federal employees are furloughed, the Trump administration is seeking ways to expand its power. If any one of our universities agrees to this compact, it risks creating a chain reaction for the higher education system at-large to side with tyrants over students. We demand that our universities do not fold, and do not sign.
"As Americans plead for their government to help with soaring costs," one expert said, "Trump is not just ignoring their struggles, he's actively making them worse with reckless policies that drive up prices on essentials."
Yet another poll exposes the pain that working-class Americans are enduring thanks to US President Donald Trump's policies, the economic justice advocates behind the new survey said Tuesday.
Polling released in recent months has highlighted how most Americans don't believe that merely working hard is enough to get ahead, a majority blames Trump for the country's economic woes, and large shares are concerned about the price of groceries, housing, and unexpected medical expenses.
The new survey—conducted by Data for Progress less than two weeks ago for Groundwork Collaborative and Protect Borrowers—shows that "American families are trapped in a cycle of debt," the groups said.
Specifically, the Data for Progress found that 55% of likely voters have at least some credit card debt, and another 18% said that they "had this type of debt in the past, but not anymore." Additionally, over half have or previously had car loan or medical debt, more than 40% have or had student debt, and over 35% are or used to be behind on utility payments.
More than two-thirds of respondents said that the federal government's resumption of student loan collections had an impact on their family's finances, and almost a quarter said they would need a one-time infusion of cash, "such as from inheritance, lottery, government assistance, etc.," to be able to pay off all of their debt.
The pollsters also found nearly 30% have or had "buy now, pay later" debt. Nearly 1-in-3 said they had taken out this type of loan—through options such as Afterpay or Klarna—in the past year to pay for basic needs and monthly expenses.
"Today's poll reveals a troubling rise in families relying on buy now, pay later loans just to stay afloat, trapping hardworking Americans in a cycle of debt that some fear will take years to climb out of," said Groundwork's executive director, Lindsay Owens. "As Americans plead for their government to help with soaring costs, President Trump is not just ignoring their struggles, he's actively making them worse with reckless policies that drive up prices on essentials like food and energy."
Trump's legally dubious tariffs—which are headed to the US Supreme Court after another legal loss last month—have negatively impacted Americans' wallets by elevating the costs of basics while also failing to deliver on his campaign promise to turn the United States back into a "manufacturing powerhouse."
"Today's poll exposes a startling new reality in Donald Trump's economy: As prices climb and money gets tight, Americans are going into debt to buy groceries, make rent, get healthcare, and even make payments on other debt," said Protect Borrowers executive director Mike Pierce. "Driving families into debt is a policy choice—voters across party lines are demanding lawmakers act now to deliver debt relief and help working families make ends meet."
The GOP controls both chambers of Congress and the White House. This summer, Republicans on Capitol Hill passed and Trump signed their so-called One Big Beautiful Bill Act, which is expected to further imperil working-class families by kicking millions of people off their healthcare and federal food assistance to give more tax cuts to the ultrarich.
To combat that agenda, "fight for families in debt, and hold corporations and corrupt politicians accountable," Protect Borrowers officially relaunched on Tuesday, rebranding from the Student Borrower Protection Center, which focused on educational debt.
"As the Trump administration turns its back on working-class families," said Pierce, "Protect Borrowers will fight back—exposing the greedy financial companies cutting backroom deals with regulators, taking corrupt government officials and corporations to court, and advancing new laws to hold the system accountable to working people."
Protect Borrowers announced 17 new members of its advisory board, including people who previously served in the Consumer Financial Protection Bureau (CFPB), Federal Trade Commission, National Labor Relations Board, and White House.
The group is also backed by US Sen. Elizabeth Warren (D-Mass.), a bankruptcy expert and the mastermind behind the CFPB.
"With wages flat and costs skyrocketing, families are drowning in debt—mortgages, credit cards, student loans, buy now, pay later, you name it," Warren said in a statement to Politico. "Protect Borrowers is exposing how rigged our economy is, and how the Trump administration is making it worse. I'm glad to stand with them in this fight."