Linda McMahon is the secretary of education.
Since taking office, the Trump administration has tackled the exploitative behavior of institutions burdening everyday Americans — from big banks in housing to health care companies driving up costs. Yet one of the least recognized contributors to consumer debt has produced one of the largest debt portfolios in America: colleges and universities.
Today, nearly 43 million Americans have accrued roughly $1.7 trillion in federal student loans. That’s almost as much as the entire gross domestic product of Australia. It is about twice the size of all university endowments combined and a larger balance than either the nation’s cumulative credit card or auto debt. All told, that means the Education Department would be the nation’s fifth-largest bank by assets.
Higher education is, of course, an investment in one of the nation’s greatest strengths: its people. But investment without accountability is reckless. Colleges and universities have treated taxpayer-backed loans as a right, not a privilege — steering students into low-return programs while expanding enrollment and increasing tuition. Congress, too, has fueled the problem: allowing students to take on debt up to the cost of attendance year after year — whether that’s $10,000 or $100,000 — and shifting the ever-growing risks to taxpayers.
As a beneficiary of federal student loan funding, institutions have a moral and legal obligation to support the students whose borrowing sustains their operations. To remain eligible for federal student loans, institutions must counsel borrowers on repayment. Those with cohort default rates above 40 percent risk losing access to federal student loans — a threshold more than 1,100 schools are above or approaching.
To help keep default rates down, the department under my leadership recently encouraged schools to adopt common-sense practices that support students. That includes informing borrowers in default about opportunities to rehabilitate their loans, enhancing entrance counseling using program-level earnings data published by the agency and setting lower borrowing limits for programs with lower earnings potential.
Across the board, the Trump administration is executing a hard reset of the nation’s broken federal student loan system — focusing not only on repayment after graduation but on restoring transparency and accountability to the borrowing decision itself. To bring costs down for American families, we must address root causes, not just symptoms.
Most students borrow believing a college degree guarantees the American Dream, yet many never see a return on that investment. If a degree does not make students better-off financially, the federal government should not enable schools to continue offering it. A staggering proportion of programs — 23 percent of undergraduate and 43 percent of master’s degrees — leave graduates financially worse off than if they had never enrolled. In some fields, the numbers are even more alarming: 87 percent of master’s have a negative return on investment.
Students deserve the truth. Just as doctors disclose the risks of taking a certain medication, students need to know if their education will yield to better or worse financial outcomes.
President Donald Trump’s Working Families Tax Cut Act establishes a clear earnings test. If a bachelor’s program’s typical graduate does not earn at least as much as a high school graduate, the program will no longer be eligible for federal loan dollars. Graduate earnings are, similarly, compared with undergraduates’. Our administration has also added an earnings indicator to the Free Application for Federal Student Aid process so families can see their expected return on investment before enrollment — not after debt accrues. This is not an unreasonable standard. It’s the bare minimum expectation. Students who borrow to invest in their future shouldn’t end up worse off because of it.
We are also hard at work implementing common-sense caps on graduate student loans, a reform that will stop unlimited borrowing in these programs. The current system functions as a blank check for universities. If students can borrow whatever a school charges, institutions lack proper incentives to control costs, forcing hardworking Americans to ultimately foot the bill. Taxpayers will no longer have to fund six-figure writing studies degrees that can cost some graduates over $500,000 in negative return on investment.
As Americans grow their families and build their futures, they should be rewarded for sound financial decisions. That means seeing their balances go down instead of watching their interest spiral out of control. Under the president’s new Repayment Assistance Plan, every on‑time, monthly student loan payment triggers up to a $50 principal payment match from the federal government and families receive an additional $50 reduction in their monthly payment amount per dependent. Incentivizing on-time payments and assisting American citizens is not irreconcilable. Now borrowers can make real progress on their debt while safeguarding taxpayer investments in their education.
Student loans exist to serve students — not institutions. They should foster opportunity, not serve as blank checks for colleges to raise tuition. As the Trump administration works to make the American Dream achievable for every family, we are strengthening every step of the higher education journey — from completing the FAFSA form and applying to college, to enrolling and borrowing responsibly, and finally, successful repayment.
This is more than a promise to today’s students. It’s a responsibility to future generations and the nation’s prosperity.
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