Trump Administration Rolls Back Obama Protections On Student Loans

Tyler Durden's picture

Just days after reports emerged that student loan defaults are soaring, which is undoubtedly due to some combination of, among other things, poor job prospects for the millions of snowflakes who graduate each year with their $200,000 educations in anthropology and the moral hazard created by liberal politicians constantly calling for student debts to be 'forgiven' (a.k.a. forcefully jammed down the throats of taxpayers), the Trump administration has revoked rules put in place by Obama that barred student debt collectors from charging penalty fees on past-due loans.

Originating from the Department of Justice, the "Dear Colleague" letter (full letter included at end of post) says that Obama's unilateral rules implemented in 2015 could have "benefited from public input"...but what good is being King if you can't unilaterally force new laws on the masses? Per the Washington Post:

The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.


The Obama administration issued the memo after a circuit court of appeals asked for guidance in a case against United Student Aid Funds (USA Funds) challenging the assessment of collection costs. Bryana Bible took the company to court after being charged $4,547 in collection costs on a loan she defaulted on in 2012. Though she had signed a “rehabilitation agreement” with USA Funds to set a reduced payment schedule to resolve her debt, the company assessed the fees.


Education officials sided with Bible, prompting USA Funds to sue the department in 2015. Earlier this year, the company agreed to pay $23 million to settle a class-action lawsuit born out of the Bible case, though it did not admit any wrongdoing.



Of course, it didn't take long for Elizabeth Warren to draft a letter to the Education Department urging them to not take away 'freebies' from America's entitled snowflakes.

On Monday, Sen. Elizabeth Warren (D-Mass.) and Rep. Suzanne Bonamici (D-Ore.) sent a letter urging the Education Department to uphold the Obama administration’s guidance on the collection fees, which they said “results in an unnecessary financial burden on vulnerable borrowers.”


“Congress gave borrowers in default on their federal student loans the one-time opportunity to rehabilitate their loans out of default and re-enter repayment,” the letter said. “It is inconsistent with the goal of rehabilitation to return borrowers to repayment with such large fees added.”

Of course, these new rules came just days after new data published by the U.S. Department of Education revealed that $137 billion of federal student loans were in default as of December 2016, a 14% year-over-year increase.  Key findings from the Consumer Federation of America:

Average amount owed is $30,650 per federal student loan borrower. Average amount owed per borrower continues to tick up, rising 17% since the end of 2013, when borrowers owed on average of $26,300.


$137 billion in default. For federal loans originated by financial institutions (FFEL) and the US Department of Education (Direct), a total of $137.4 billion in balances were in default, a 14% increase from 2015. This cumulative level of defaulted balances includes loans which defaulted in previous years. Defaulting on a federal student loan comes with severe consequences. Borrowers can face seizure of their tax refund, garnishment of their wages, and an inability to pass employment verification checks.


1 million Direct Loan defaults in 2016. In 2016, 1.1 million Federal Direct Loan borrowers defaulted. Federal law typically defines a federal student loan default as being 270 days past due. Borrowers defaulting for the first time slightly decreased compared to 2015, though borrowers re-defaulting slightly increased compared to 2015.

 Seems the cost of financing those spring break trips to Cancun just got a little costlier...sorry, snowflakes.


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Chris Dakota's picture
Chris Dakota (not verified) Bigly Mar 18, 2017 6:51 PM

Snowflakes gonna be pissed.

brace for impact

nmewn's picture

I can just imagine the protest signs being printed up over at SorosPrinting LLC...

"A college degree is my right!" Soros sells into the nuuuz ;-)

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) nmewn Mar 18, 2017 6:58 PM

Although I do feel bad for the special snowflakes who are convinced by the "educated ones" that having $200K of debt for a Womyn's Studies "degree" is the right path in life.  First, get the government out of the college loan/grant/funding game.  Then make colleges liable for their flunkies not being employable after "graduating."  That should fix the problems real quick.  No more Womyn's Studies and other less than useless degrees.

And, as an aside, that woman next to Trump is a hottie for her age.


tmosley's picture

Any contract that you can't get out of is de facto slavery. Trump must overturn Bush's proclamation that student debt can not be discharged in bankruptcy.

Until then, anyone and everyone who owes money on student loans should default. I don't consider any contract that makes a slave of one party to be valid. Neither would a fair court. Unconscionable terms get the entire contract overturned.

Ram Man's picture

You enter into a contract to pay and you'll pay and like it.

max2205's picture

They probably won't take out an home equity loan when they  grow up....

xythras's picture
xythras (not verified) max2205 Mar 18, 2017 8:48 PM

Most important, Trump rolled back Harambe from the White House and brought a Fine Lady worthy of the position.

First Lady Melania Looked Stunning in her St. Patrick’s Day Outfit


Stanley Kubrick's picture

Just heard a radio ad for college degrees in "HOMELAND SECURITY"...advert paid for by Inc.

This is seriously fucked up.

When's the revolution start?


kavlar's picture

Sure, Trump's protecting his rich banker buddies against poor students.

lexxus's picture
lexxus (not verified) kavlar Mar 18, 2017 9:03 PM

Nothing will EVER change.

The rich will fight for the rich. Screw the little guy.

Four chan's picture

from the look of todays students protesting our president, they arent getting much out of the jews education system anyway. 

MagicHandPuppet's picture

Sorry, but I don't see this as the "rich protecting the rich" or any such nonsense.  I totally support this move by the Trump administration, but I hope it does not stop here.  The issue is: Goobermint (and therefore the us tax slaves) should have absolutely nothing to do with backing/guaranteeing loans of any kind (including Student Loans).  Putting tax slaves on the hook for Johnny Pink Pussy Hat's loan so he could "earn" a degree in Feminazi Studies while drinking cheap beer and sniffing panties for 4 years is one of the biggest crimes against us tax slaves since the 16th Amendment.


QuantumEasing's picture

You aren't on the hook unless you are a Goobermint employee.

Find a job in the private sector, no one is forcing you to feed at the Goobermint trough.

And if you are a Tax Slave by choice (erroneously), then that's your business.

MagicHandPuppet's picture

"No one is forcing you..."

Apparently, you've never experienced a tax lien.  Good for you.  But, just because you've never experienced them does not mean they are not real.  You can also look up Wesley Snipes or read up on what they did to Irwin Schiff if you want to try and play semantics with them.  Spoiler: you lose.  They own you.  A tax slave in denial is still a tax slave.

stubb's picture

So why is Al Sharpton still being allowed to skate on his five million dollar tax debt. Trump should hang him from the ceiling and beat the money out of him like a big black pinata. 

Muddy1's picture

And don't forget Warren Buffet is still doing everything he can to avoid paying his taxes.

The Gun Is Good's picture

But then they throw the book at an intangible national treasure like Willie Nelson (Most musicians / entertainers don't even come close to his talent, never mind integrity.)

I guess Uncle Scam likes to make examples of free thinkers from time to time....

azusgm's picture

Because Al Sharpton has been an FBI informant for years and years.

Seriously. Just consult Rabbi Google if you don't believe it.

B1G mNy's picture

That's quite a mental picture for a Sunday morning, but I like it!

QuantumEasing's picture

No, I have not. And never will.

Because I put on my big boy pants and actually learned about stuff. You can do it too.

I am not Federally privileged. The IRS has acknowledged this. In writing.

Tax liens are absolutely real. The IRS will come after you if you owe them. But you only owe them if you are a public office holder.

What you choose to do is your own business, but don't denigrate me for deciding not to follow your example.

jeff montanye's picture

i don't remember wesley or irwin working for the government, big boy pants.

how about quoting that irs acknowledgement in full, every line except black out your name and address, etc.?

QuantumEasing's picture

Irwin and Wesley had their hearts in the right place, but they made specious arguments. They got nailed to the wall as a result.

I'll do ya one better. Here's hundreds of aknowledgements:

Mine's in there.

QuantumEasing's picture

Which guy, specifically? There's a lot of "guys" on that list.

And if you mean the author, nope.

Prisoners_dilemna's picture

Liability for the tax arises when a federally connected activity is performed. The money we earn from the activity is the measure of our "gains, profits, and income" . The IRS wants you to think the tax falls on that receipt of all moneys or everything that comes in. That would be a capitation. The income tax is not a capitation, it is an excise.


Private sector citizens become liable for the excise tax when someone else misuses a w-2 or 1099 and ignorantly alleges that the monies paid were "federal monies" for a "Fed-guv activity".

Learn to rebut the still ignorant payers false testimony. If you don't their false allegation is accepted as true. The records will reflect that you either agreed, or failed to rebut. On paper, and on the legal record it will appear that you were paid under some federal government connected nexus. The IRS is allowed to have its way with "taxpayers" .(26 US Code 7701(a)(14) - The term “taxpayer” means any person subject to any internal revenue tax.) Yaxpayer is not defined as "all Americans" "or "All Americans who work and earn money".     Long list of names of Americans who have learned this info, have acted on it, and are applying it. They're taking control of their hard earned money and their accounts with the IRS. They are not paying a tax they're not liable for.  They're not letting the false testimony of others create a liability they otherwise wouldn't be saddled with. They are properly rebutting the false testimony made ignorantly by others. They are knowledgably claiming refunds of their own property, which they know isn't due as a tax because they read the law for themselves at  

The IRS whines and cry a bit along the way but they process educated and lawful returns, then they cut the checks.

Eternally vigilant Americans who receive their property back then photocopy the checks and the tax returns and uploaded the images to losthorizons for other Americans to take heart in and also to learn from.

It would behoove you to learn this info. If you are at ZH then I presume you are more than intelligent enough to comprehend the information written at It is my opinion that every American will benefit from the knowledge written down there.


You no longer need to live under the mistaken belief that everything you do is taxed and the government is allowed to inspect every financial orifice of yours. You do need to learn what the law actually says. Go learn the law and then uphold thw law!!! The rest of us are doing it!!! Fed-guv and the IRS is not all powerful. The emperor is naked!!!




mc225's picture

'prison planet for $100, alex'

Prisoners_dilemna's picture

People who aren't tax slaves don't get liens put on them, tax slaves do.


Case studies in how the IRS attempts to keep Americans shackled, but in the end admit the American is free,


A long list of free Americans, along with photos of their checks of everything withheld from them returned. (often the filing is there too for you to learn from.


Are you enjoying life on the plantation? Why not free yourself? All you need is an internet connection, ability to read, and a desire to get off the plantation.

guitarzaan's picture

Ther's also quite a list of convicted felons who tried to use that bullshit in front of a judge to evade American Tax Laws.  Learn how to use a search engine pd and stop peddling your fiction and bullshit.

QuantumEasing's picture

A list of those Felons sure would be helpful here.

We already know they tried (and failed) to censor Hendrickson.

Just keep using the Stampy-Foot method and throwing around naughty words. That'll win you the argument for sure.

Here's a hint: nobody is going to force you to do this. Feel free to keep taking the Red, White, and Blue dick up your ass.

Prisoners_dilemna's picture

You link to the official narrative which the IRS desperately hopes Americans will believe.

Your propaganda is addressed here,


guitarzaan's picture

Whatever.  -- legal citiations included but you'll ignore them just like qe does.  Again, whatever.


pd, you're just another useful idiot peddling someone else's propaganda and bullshit.  Fuck Off!

QuantumEasing's picture

How I wish I could put you on ignore, Oh Shrill Shill.

What have I ignored? The fact that yes, the Hendricksons were railroaded with charges that their signatures on an IR was "insincere?!" Nope, acknowledged.

It does not somehow render the CtC invalid.

You have ignored my request to show even a SINGLE person charged, let along indicted, on charges that CtC is unlawful.

And "whatever." Such incisive wit. You really should consider becoming an attorney. With persuasive abilities like that, you'll be the next Darrow.

Put up, or shut up. With prejudice.

guitarzaan's picture

@pd -- Provided without prejudice:  (source cited earlier -- the one with in title, which, of course, invalidates it even though the case is cited.  But, whatever.)

"On his "losthorizons" web site, Peter Hendrickson has referred to "Cracking the Code" follower James A. Stuart — even including a link to a PDF document that Stuart had used to evade federal income tax. On December 7, 2011, the Hartland, Wisconsin resident was found guilty on three counts of tax evasion under section 7201 of the Internal Revenue Code for filing false Form 1040 returns by willfully failing to report, as income, the compensation he received from a company for tax years 2005, 2006, and 2007. In October of 2012, Stuart was sentenced to 33 months in federal prison on each count, with the sentences to run concurrently. See United States v. James Arthur Stuart, Jr., case no. 1:10-cr-00288-CND, U.S. District Court for the Eastern District of Wisconsin. He appealed using a different lawyer than the one he had used at the trial, and argued that his trial lawyer had been ineffective. At his trial, three of Stuart’s accountants testified and referred to Stuart’s Emails regarding the book “Cracking the Code.” On appeal, the Court of Appeals for the Seventh Circuit indicated that Stuart had adopted his views about federal taxes after reading “Cracking the Code,” but that his trial lawyer had told the jury that Stuart had adopted his ideas from fellow church patrons. In the appeal, Stuart’s new lawyer maintained the trial lawyer had been ineffective, in part, because the trial lawyer had not interviewed Stuart before the trial to determine that the correct source of Stuart’s belief was the “Cracking the Code” book. The Court of Appeals was not persuaded that the trial lawyer had been ineffective. On December 3, 2014, the convictions were affirmed by the U.S. Court of Appeals for the Seventh Circuit (case no. 12-3471). Stuart was inmate number 10939-089, and was released from prison on January 23, 2015."

Whatever is very succint and I see that it worked quite well for you.

Just so you know, I don't trust adults -- ever.  Especially those who claim or pretend to act as if they give a damn about others, especially those they view as inferior or less knowledgeable than themselves.  So go ahead, silver spoon, preach your bullshit.

QuantumEasing's picture

Wow. You got back up.

I guess you like getting whipped like a red headed stepchild.

And your presumptions about me are fascinating.

And wrong, like the rest of your verbal diarrhea.

And you will have to grow up someday.

guitarzaan's picture

whipped?  lol!  still standing and my view of you, well, it may be inaccurate and then again, it might be spot-on.

Prisoners_dilemna's picture

I didn't ignore those very serious allegations. I did investigate them though.


Pete and Doreen Hendricsons prosecution is a severe miscarriage of justice. I arrived at this conclusion after investigating both sides claims.

Here is Petes version,


The government brought numerous lawsuits to have Petes book Cracking the Code banned.


This was part of a greater effort to prevent the American people from learning what Pete dug up through his computer and internet-assisted research into the smoke, mirrors, traps, and pitsfalls which is the income tax scheme.


The real reason Pete is vindicated in my book though is because what he wrote in CTC checked out against everything I read for myself. His claims passed muster.  ie;

Adam Smiths An Inquiry into the Nature and Causes  of The Wealth of Nations (1776) wherein the term Capitations was invented and used to describe the horrid tax in France which lead to the decapitation of all tax collectors. This is where the founding fathers got the term which they then utilized in the Constitution.

Articles 1 Section 2, 8, and 9 of the US Constitution where it is clearly stated, twice, that direct taxes such as a capitation must be apportioned and indirect taxes such as duties, imposts, and excises, must be uniform throughout the States.

Here is the text of an act levying a Constitution direct tax,

"An Act to lay and Collect a direct tax" it clearly starts with. The income tax is an excise. Do you dispute this?


I've read quite a few titles throughout the US Code. It's really quite simple, I just type something like "26 US Code 7701" into google and I'm lead to Cornell Universitys Online Law Resources where I can read that legal terms such as "wages", "employee", "employer", "includes", "taxpayer", "united states", "state", and a whole slew of others are custom defined in the code and don't have the common word definitions I attribute to them. (this is part of the smoke and mirrors deployed against the American people).

ie. Rather than have to notarize an affidavit, or appear in person to make an oath under statement, I am allowed to make a sworn declaration under penalty of perjury, and it will be accepted as evidence in a legal proceeding in federal courts. 28 US Code §1746


I could go on but I want to give Fight Club a good show. Get back up... I'm not done with you yet.

guitarzaan's picture

Still standing!  Adam Smith?  What century are you in?  So much bastardization of fundamentals has occurred and you know that  -- or at least, I think you do. 

Where does the current system fit into the fundamentals Mr. Smith espoused and demonstrated?  We have a goddamned central bank, in case you didn't notice!  We have an income tax system which is unjust.  And, yes I know that as do many others but one or two people going up against that is madness -- you will and people have lost -- a lot! 

Need more people that understand what is happening but where are you going to find them?  Coming out of the skools in America?  pffft!  Our schools do not teach economics -- especially free market Capitalism; but you know that, too.  So, how in the hell do you propose we start a revolution - and I think it will take a revolution in thinking and peaceful action -- to change this ?  Should we start with actions where we are imprisoned one or two people at-a-time?

I ate my wheaties and had a few slices of a good supreme pizza earlier!  I'm still standing!

Hendrickson sure as hell didn't help himself by doing this:

"Hendrickson is a two-time loser [clearly, thin federal criminal tax cases. His first loss came in the early 1990s. He was indicted on October 24, 1991, and on March 3, 1992 he pleaded e author is prjudiced against Mr. Hendrickson] guilty to one count of willfully failing to file an income tax return and one count of conspiracy to place an incendiary device in the United States mail. United States v. Peter Hendrickson, No. 2:1991cr80930 (U.S.D.C. E.D. Mich.). Hendrickson was sentenced to 21 months in prison, and was released on 8/25/1993 (register # 15406-039, Bureau of Prisons, U.S. Dep't of Justice)."

guitarzaan's picture

wow! how the hell did this get a down vote already?  lol!  Now that's with prejudice...

QuantumEasing's picture

Red Herring.

The current system operates on the principle of "clean hands doctrine."

The rules are the rules, but it is up to you, and only you, to determine if they apply to you or not. Playing the game, no matter how skillfully, means nothing if you are playing with the wrong set of rules. The recourse and remedy are out there, but the PTB are not going to spoon feed you. And are not going to go easy on you for getting it wrong.

"Tax protesting" will get you arrested. Because you have already agreed to the presumption that you are a Taxpayer, just that it is wrong on moral or legal grounds.

An unrebutted presumption stands as truth.

CtC is a good start, and even though it may not be perfect, several tens of thousands of victories and refunds are a pretty good indicator that it is lawfully valid. How do you explain the refunds, otherwise? The gauntlet the returns must make is tortuous and circuitous. They are not "slipping through the cracks."

Again, Schiff wound up dying chained to his bed for making arguments like you are proposing. Russo was off the mark. If you can actually answer the question of "what, specifically, in line and verse, is unlawful about CtC," you might be taken seriously.

Up to this point, you have been behaving like a troll. It's never too late to have a civil discussion, if that is truly what you want.

guitarzaan's picture

Not meaning or trying to be a troll.  CtC is a full-on assault on the senses and preconcieved notions about how to oppose income tax without winding up in prison.  Have read of these claims before that there are people who are not paying income taxes and the calims turn out to be nonsense.  To the point that good people wind up in a lot of trouble following someone else's advice on this subject.

My opposition to this current iteration of tax protest stems from the undesirable outcomes I've cited in the links in my less than kind or charitable replies to your very civil posts.  For that, I would like to apologize.  Did not know about Peter Schiff's father or Aaron Russo.  I am going to get a copy of CtC and dig a little deeper.

Thanks for the insights.


Prisoners_dilemna's picture


Except filing an accurate and honest (CTC educated) return is not a "tax protest". That's mud the IRS likes to sling.


To the contrary, filing a CTC educated return is perfectly lawful, which is why the IRS regards them as a blood-sucking vampire does sunlight.

QuantumEasing's picture

My opinion of you has been altered.

It is a natural response to be highly skeptical of something so far outside of previous experience.

It is a firehose of information. A veritable assault on not just the senses, but the entire worldview.

You are wise not to take anyone's opinion. Dig. Immerse. Get grease under your fingernails.

I apologize for my less than polite verbiage directed at you previously.

My hat is doffed to you, gentleman to gentleman.

It would be a pleasure to discuss this with you over beers.

Prisoners_dilemna's picture

"We have an income tax system which is unjust." Agreed, however, the income tax is not a direct tax, it is a Constitutional excise tax. Do you dispute this?

In practice, Americans who haven't learned what Petes research has proven are victims of their own ignorance of relevant law. Ignorance of this topic is understandable, that was an essential part of the scheme. Skepticism is healthy and I don't begrudge you that.

However after enough investigation, the truth of the matter is revealed, which is also the revolution you ask for;

Read Cracking the Code by Pete Hendrickson to learn what the law says. Then uphold the law. When a sufficiently large numbers of Americans act on their knewfound knowledge the situation will resolve one way or the other. But at least our decisions will be informed by accurate knowledge. The IRS isn't unlawful. It absolutely preys on ignorance. Everything is legal, if only in a deliberately twisted and round about way so as to maximize revenue thru the deceit. The IRS today detests that its lair has been cleared of smoke and the mirrors shattered, the traps disarmed, and the pits filled in, by Pete Hendrickson. It's as simple as that. There is your revolution. The people re-awakening in the most meaningful way possible to their own wallets combined with a brutal recognition of the extent government will go to for its self-serving and revenue-wasting purposes. We no longer need to bicker about how fed-guv spends funds because we're not voluntarily and ignorantly sending it funds we're not obligated to. Americans simply need to read the law for themselves. Pete Hendrickson crossed the finishline first because he had what it took. He wrote the book, literally. This also made him the target as you correctly point out. Yet the refunds continue...


“Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives.”

-James Madison

guitarzaan's picture

I have some research to do.  My apologies for being unkind, uncharitable, and rude.

Prisoners_dilemna's picture

Thanks for bringing up that trollery so we could shine the disinfecting light of truth onto it. I'm sure (and I bet all of ZH agrees with me) that the official narrative you quote is undoubtedly and scrupulously honest and accurate, without any exegerated rhetoric.

Read Pete's version of the "bombing" here;, and decide the truth for yourself.

Blankenstein's picture

What do you mean you aren't on the hook?  If you pay income taxes, you are on the hook if people don't pay gooberment backed loans.

QuantumEasing's picture

I mean that I, personally, am not on the hook because I am not a Federally privileged entity.

If you are a public official, and thus owe excise on your privilege, you are on the hook. And I will shed no tears for you.

But if you are a private sector worker, you do not owe the excise, and are actually committing perjury if you claim the entitlement of Taxpayer.

Prisoners_dilemna's picture

I imagine all ZH readers are astute with above average acumen.

Apparently there are at least six swine among us.

"pearls before swine", Very well said QE.


26 US Code Sec. 7701

(a) When used in this title (26 - Internal Revenue)...

(14) Taxpayer

The term “taxpayer” means any person subject to any internal revenue tax.


Excises are not capitations. Capitations must be apportioned. Excises must be uniform. The income tax is an excise.


When you go grocery shopping do you become liable for the excise tax on a pack of cigarettes? No of course not.

If you perform work in the private sector do you become liable for the excise tax on working for fed-guv? No of course not.


Learn how to rebut w-2's and 1099's produced by payers. They erroneously allege that the money you earned is from a federally connected activity, which is what the tax falls on. 

Only federally connected payments are to be reported on information returns. (w-2's 1099's)

The IRS thanks you for your voluntary compliance.

Voluntary: Under no legal obligation   Blacks Legal Dictionary