Trump’s first student loan action

In this “Dear Colleague” letter, Trump’s administration takes its first action on student loan policy. Unsurprisingly, it was to rollback an Obama administration Dear Colleague Letter that prevented some collection agencies from charging extremely high fees when collecting on old defaulted FFELP loans if the borrower tried to respond quickly and enter into a loan rehabilitation agreement (i.e. actually pay them off).

This won’t affect any recent borrowers from this decade, in which federal DIRECT loans replaced the older system of private companies lending and the federal government serving as a guarantor.

What it does demonstrate is that no one should be surprised if nothing consumer-friendly comes out of this administration, and student loans are unlikely to be an exception. Trump’s campaign student loan plan was so financially unsound and costly that it is highly unlikely to ever make it anything more than soundbyte.1It made the coming wave of PSLF forgiveness that everyone is so worried about look cheap.