According to the Federal Reserve Board, some 44 million Americans owe a total of $1.4 trillion in student loan debt. America's student loan debt crisis is a huge problem, and now, in a new proposal that could have serious repercussions for millions of those Americans, the Trump administration may tighten criteria for student loan forgiveness seekers, according to The Wall Street Journal.
If successfully implemented, the plan will give students two options, according to the WSJ. The first would require students seeking loan forgiveness to default instead of applying for debt forgiveness while in stable financial standing. The second option would require students to place "affirmative" claims to student forgiveness and also somehow prove the for-profit corporations' "intent to deceive" or that they had displayed "reckless regard for the truth."
Education experts and senators alike have spoken out against the proposal. Program director for the non-profit Student Debt Crisis group, Cody Hounanian, tells Bustle the Education Department's proposal could worsen conditions for students drowning in debt. "This is just one of the many attempts to jam all of the student loan forgiveness programs with a gridlock so that borrowers can't access relief. Part of the motive is to make it as difficult as possible [and] to make it take as long as possible," he says.
"This Education Department's perspective here is that students should be able to make informed educational choices, which they are and they do," Hounanian adds. "But they are lied to and defrauded in many ways by for-profit colleges."
The WSJ reported that the Education Department claimed that it wants to help "genuine" victims of exploitation and root out supposedly "frivolously" complaints from others.
Explaining the supposed reason behind the plan, WSJ reported Education Secretary Betsy DeVos said, "Our commitment and our focus has been, and remains, on protecting students from fraud. The regulations proposed today accomplish that by laying out clear rules of the road for higher education institutions to follow." She assured that the new plan would protect student consumers and not corporations.
However, Hounanian says that the department's options for people desperately seeking student loan forgiveness carry far-reaching consequences. By requiring people to default on their loans, Hounanian says that students would lose critical financial aid, have to pay for fees added to their student loan, or get harangued by debt collectors.
"So, really," he says, "you're asking borrowers to make their lives miserable with the hope that the department will then forgive their loans. It's completely punitive and it's going in the wrong direction."
On top of that, Hounanian says that defaulting comes with devastating financial consequences. "It makes it harder to apply for a mortgage," he says, "it makes it difficult to apply for a car loan, and of course, you lose out on any future financial aid to go to college." Without financial aid, many students may have to give up on their dream to complete or continue their education.
As far as the other option — of having to prove "intent to deceive" — is concerned, Hounanian says it's an unfair demand to be made of students. "How do you prove that a major corporation — a public company like some of these for-profit companies are — as an entity decided to defraud you as an individual? It's much more complicated. This is systemic fraud," he says.
Hounanian adds that the Education Department is ultimately siding with for-profit colleges at the expense of students drowning in debt. Like millions of American, Hounanian says his parents and grandparents had to shoulder some of his debt — which amounted to over $100,000.
"That was me, my parents, and my grandparents," he says, "we all had to pay for my own education. This was a generational issue, this was a family problem, this was a personal crisis as well, for me."
But Hounanian has some hope for the future — and advice for those seeking to build a coalition. "I think it's important for others to share their stories and join the movement [for student loan forgiveness]," Hounanian says. "It really starts with how you, individually, are impacted."
For now, those keen on seeing how the department's proposal unfolds will have to wait. The final rules for this potential plan will come on Nov. 1. Before that, the Education Department said that it would welcome comments on its proposal.