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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hobo with a shotgun's picture

Then send them to debtor's prison, brand them with hot irons, and connect electrodes to their genitals, right?

shovelhead's picture

Don't be silly.

Hard labor will suffice. Free tuition at Rockcrusher U.

Economy-X's picture

Holy Christ, one could only wish to see this much zelan and hostility targetted towards the real snakes in the grass,  the bankers, the corporates and the politicians, who between rack up billions and billions in tax fraud every year that you and I must pay back.


Instead we get exactly what the elites want. Average Joe screaming bloody murder at his fellow oppressed citizen who had to take on a bucket load of debt to try and get ahead. The real snowflakes don't have debts you moron, becuase their daddy's are the ones issuing debts. How they must laugh up in Trump Tower/Golman Sachs/White Tower House, whatever, when they see this

laomei's picture

When day of the rope comes, kikes like you will sway in the breeze

rudyspeaks's picture

So ZH is siding with the corrupt bankers and greedy Academics (whose cost have risen 4X faster than inflation)? Great! At least we know who pays the fuckinhg bills for you! Any outrage over million dollar bonuses for fraudsters? Not in this article! We accuse the Dems of "hating the middle class" but look at how we rush to the defense of the parasites who bleed their kids! ##Watch where the money gets re-directed, how they interpret it, and you'll see whom they are working for.

Indelible Scars's picture

How in fuck all do you deduce ZH siding with bankers? It's an informational article.

caribbeanbarry's picture

Exactly! Nobody forced these dip-shits into debt. What about the parents that stood by and watched the little participation trophy winner party off into the 6 year gender studies program...

Economy-X's picture

Well its either go to University or work in MCD's, so I gues there is a degree of coercion my friend. One way or another we have to choose between one ass-fuck method or another. Freedom is relative to the choices between which we are free to choose...

IridiumRebel's picture

There are numerous trade schools too.

crossroaddemon's picture

A trade school is the same these days as a two-year CC degree... you're gonna come out with 40k of debt.

crossroaddemon's picture

No, it's not. 30-40 miles to three different sides of me are community colleges in the same building as tech schools, and tuition is exactly the same. If anything the techies are in for more because they have to buy tools and shit.

tmosley's picture

I can imagine a guy like you in Fight Club, yelling at all the people while Tyler talks about their wasted potential, and how they were lied too.

I think that scene would end with them getting your balls.

IdioTsincracY's picture

Maybe from this passage?!?

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.

laomei's picture

Federal student loans. We are siding with TAXPAYERS who are being stuck with the debts of snowflakes who willingly chose to STEAL our money to pay for BOLSHEVIK bullshit.  

Lost in translation's picture

The Air Force paid part via my GI Bill. I was also awarded three scholarships.

I borrowed 4 figures, though, in two separate loans. Had to. The one accruing no interest I paid off in 5 years after graduation. The one accruing interest I paid off in 6 months, because compounding interest terrified me (still does).

None of the above was enough, though, so I picked up part-time work everywhere I could: cleaning horse pens, setting irrigation lines on a farm in Pomona, working cattle outside San Ardo, I even worked in a slaughterhouse for a year. After graduation things got a little better, during graduate school I was able to pick up some stray days as a substitute teacher for a local school district.

One way or another I managed to earn enough, I made it. Couldn't take trips anywhere, my car was an old, used beater but it ran, and my clothes were second-hand. Had no health insurance, so I exercised and tried to eat well. If I got too terribly sick I went to the Student Health Center on-campus.

I just figured I was paying my dues, so to speak...

hobo with a shotgun's picture

It's called being a slave to a financial institution. You were "creating wealth" in an era where GDP is based on lies and bullshit. Glad to hear that you escaped.

silverer's picture

Like those Walmart "rollback" signs going in reverse, lol.

homebody's picture

Party on bitches and then pay the tab.

Greendawg's picture

Good these libtard parasites should be forced to work at wal mart for the rest of thier lives.  Actually wal mart seems like too tough of a job for someone witha a gender studies degree, but than again i dont think you can get paid for playing with play doh and crayons.

Economy-X's picture

Do you really believe that the millions of students in America today really fit the caricature you and these other ZH hate mongrels paint. Come on and open your eyes, the majority of students in debt are the same as the majority of Americans in debt, oppressed people trying to get a leg up in a system that screws them royally continually. Simple as!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

captain-nemo's picture

This have been a good weekend

IdioTsincracY's picture


Screw the students ... who needs them anyway!

On the other hand, we need to strongly support our beloved Financial Institutions!!

Make America Give Again!

caribbeanbarry's picture

Clearly the students are not, in fact needed. Even George Soros has his limit to the number of rioters he can employ... what are the rest of the gender studies and art history geniuses going to do?

Indelible Scars's picture

If I wasn't goddam sure that the little pricks have spent half of it on spring break trips, I might feel bad. Nope. Fuck you little twats. Pay your bills like the rest of us.

Anarchyteez's picture

I know several of them and they are unemployable.

tmosley's picture

Your bills are dischargable in bankruptcy.

What does it feel like to be such a massive hypocrite? To be honest, you and the people like you make me sick.

chosen's picture

College education is not worth $200,000.   I paid zero for mine, with scholarships and work, no loans, nothing from parents,  but tuition was much cheaper back in the day.   Colleges and universities have become a scam to pay high salaries and high pensions to professors and administrators.  Don't get sucked in.  Academia needs to go bankrupt.

Indelible Scars's picture

Any person that goes 200K in debt for a degree automatically disqualifies themself for a job of ay kind. The vast majority of businesses don't want to hire morons.

bankerssuck's picture

Yes,let the "higher education" (LMFAO) go bankrupt if they are not providing a service, just like any other business.

If that piece of shit.paper you recieve at graduation no longer gets you an avenue for employment in that field of study.......

Then quit studying those useless fields, idiots.

Jeez, it's not like those statistics are not in your face, if you are competent enough to research before diving into the rock lined water of employment possibilities.

shovelhead's picture

You should see the new Athletes dorm at the State Uni.

Holy Shit, it looks like a cross between a luxury resort and an upscale mall while the regular non TV rights 'worker earners' get 50's Soviet hi-rise style dorms that the hallways induce claustrophobia in normal people.

The Admin. buildings parking lot looks like a drug dealers convention with more bling per square foot than an Abu Dabi hotel.

These kids ARE getting fucked even though some of them deserve it.

NO GOVT. LOANS. PERIOD. That's what Trump needs to do. You can't fix a torpedoed ship with bubblegum.

Blazing in BC's picture

How about the college/university provide the loans and deal with the defaults as required.

Taxpayers off the hook.

Lost in translation's picture

Here in CA we desperately need to get taxpayers off the hook for K-12 education [sic], as well.

It's nothing but make-work employment for the non-productive members of US society (Affirmative Action hires, career academics, artists, unemployable Hollywood actors, et al) and daycare for 60-IQ Third World invader-freeloaders.

No upside.

anticultist's picture


those that cannot produce, teach

IridiumRebel's picture

I've produced for 25 years and now am going in to teach. Not cuz I cannot "produce", but because these fucking Marxists need to be taken on.

You're fucking welcome.

RickJamesTheThird's picture

Those that cannot produce, REproduce.

chosen's picture

I drove by an elementary school playground the other day (in the Bay Area) and I'd say 99% of the brats were beaners.

hooligan2009's picture

brilliant idea!

sort of like AAPL providing finance for its i-phones - problem is, i-phones have half the functionality and four times the price of a huawhei - same with the quality of the qualification.

a measure of the success of an open economy's education system is its trade balance. those with a deficit SUCK!

Anarchyteez's picture

I don't see financing students anywhere in article 1 sec 8.

Economy-X's picture

Actually the entitled snowflakes are the ones who have no debt because daddy is a banker who fucks over the rest of middle "working" classes. The majority of student debt slaves are working classes schmuck's trying to get ahead in a world that just keeps taking from them and giving to the 1 per centers.


Any yes, student loans should be susceptible to bankrupcy discharge, and yes the government should either stop giving such loans or cap the amount the Universities charge, as otherwise its just another license to redistribute from society in general to a few corpo fat cats.


...but inequality is the surest path to war and the return of the guillotine!!!

Xena fobe's picture

Their parents should have thought of that. College debt of other people's kids is not the entitlement fairy's problem. The entitlement fairy has her own problems. 

shovelhead's picture


Yes, we need more Govt. to fix what Govt. broke.

That sounds like a plan for success.

Dead Indiana Sky's picture

Financial accountability in 'Murica?  That is so foreign.  Like a Middle Eastern wedding party.  Drone 'em all.

Attitude_Check's picture

This needs to be done in conjunction with not giving student debt special treatment and allowing it to be discharged in bankruptcy - just like all other debt.

ZD1's picture

First get the Federal government out of the student loan business and put an end to taxpayer guarantees of student loans.

anticultist's picture


I like everything about trump until this, this is not the solution.

The solution as usual is blow the bubble up all bubbles return to origin, destroy the university town rentier class

returning tution and rent to their origins whatever that benchmark was say before 1974 gold standard price

as a relative index to min wage.


So with my hope trump is running the 4D chessboard to troll the ignorant, with the scheduled end game to blow this up

exposing the clinton non-dischargeable statute, ending all federalization collapsing the bubble to its origins.


But really for the masses and masses of unemployable snowflakes, post industrial era trends, there really is nothing they

can do of productive value in a malinvestment waste consumption neoliberal war currency economy, unemployable. Unless all federalization

is collapsed returning to constitutional human and property rights 

order all clinton hyperinflation

disasters blown up to their origins. It is a karmic consequence or the newtonian law of equal and opposite reactions that all bubbles

will return to their origins one way or another, they are going to find out about that anyway, say starting in high end real estate and through

university town rentier property.


TeethVillage88s's picture

Under-Rated Post, Weekend Crowd, weekends are hell.

"The solution as usual is blow the bubble up all bubbles return to origin..."

TeethVillage88s's picture

Where is my list of Bankruptcy law.

1978 - Bankruptcy Reform Act of 1978,
2005 - BAPCPA 2005 (Bankruptcy Act)
2017 - President Don Trump Rolls Back Student Loan Provisions

President Trump is kinda acting like John McCain?

1956 - Bank Holding Company Act of 1956 (BHCA)
1992 - Energy Policy Act (H.W. Bush)
1996 - Energy Deregulation (W. Clinton, followed by ENRON Scandal)
1996 - Telecommunications Act (W. Clinton, cross ownership)
2002 - McCain–Feingold Act (G.W. Bush, Campaign Finance, soft money unlimited)
2010 - Citizens United v. Federal Election Commission (money is free speech for corps)
2014 - lift ban on crude oil exports (Commodities Deregulation)