Trump To Rewrite Obama Rules On Student Loan Foregiveness

Tyler Durden's picture

A few months ago we noted that 31% of college students in the U.S., or roughly 2.4 million kids, literally admitted to using student loan money to fund their binge drinking trips to Cancun and Daytona Beach for spring break.  Now, while most of us who've had the opportunity to live in the real world, outside the comfort of mom and dad's basement, would consider it a bad idea to borrow 10-20 year debt to take a vacation we couldn't afford, many college students seem to think it's a perfectly acceptable practice. 

Now, to be clear, we have no problem with making bad decisions, sometimes those are the most fun (see pic below for evidence).  We only ask that the people who make the bad decisions are also the same people who get to deal with the consequences of those bad decisions.

Spring Break


Unfortunately, in the Obama administration the lines between victim and perpetrator were often blurred to be point of being interchangeable.  So, while we may say that a college student who borrows money to binge drink is a moron (best case) or a criminal guilty of loan fraud (worst case), Obama would describe that same person as a victim of predatory student lending practices who had no idea that his/her 2.1 GPA in Anthropology from the University of Phoenix wouldn't automatically guarantee him/her to a 'career' making $200,000 a year immediately upon completion of their 7-year Bachelor of Art it a po-tay-to, po-tah-to sort of conundrum.

Of course, faced with such a conundrum, the Obama administration did what any self-respecting liberal politician would do: it drafted new, confusing regulations to punish for-profit schools and basically made taxpayers backstop the ill-informed financial decisions of their students.  The Washington Post described the resulting regulations as follows:

Under the borrower defense rules, students could have their loans erased if their college misrepresented the quality of its programs or broke a “contractual promise” with its students. The gainful employment rule was designed to ensure that graduates would be able to earn enough money to pay off their student loan debt.


The Obama administration had led a crackdown on for-profit colleges accused of misconduct. The Corinthian Colleges chain was under heavy pressure from the Education Department when it shut down in 2015. In that case, more than 15,000 student claims for loan discharge because of fraud have been approved, totaling $247 million in loans.


Last year, the ITT Technical Institute, one of the nation’s largest chains of for-profit colleges, shut down, saying it couldn’t survive sanctions by the department. The chain had been accused of misleading students about the success of its graduates and was at risk of losing its academic accreditation.

But, apparently the Trump administration isn't susceptible to the same visual impairment when it comes to deciphering between 'victims' and adult-aged students capable of making logical financial decisions, should they so choose.  So they're tossing out the Obama rules and writing new ones...

The Education Department announced Wednesday that it will change two key Obama-era rules governing student loan forgiveness in cases involving fraud and misconduct by universities.


The department said it will convene special committees to rewrite Borrower Defense to Repayment and Gainful Employment regulations.


DeVos said in a statement Wednesday that the regulations were “overly burdensome and confusing” and need to be streamlined.


“The result is a muddled process that’s unfair to students and schools, and puts taxpayers on the hook for significant costs,” DeVos said.


She said many colleges have complained that the definition of misrepresentation and breach of contract is too broad and that institutions lacked meaningful due process. The Education Department will conduct hearings on the regulations in July.


“It is the department’s aim, and this administration’s commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow,” DeVos said.

...which has left some Attorneys General in snowflake states severely 'triggered.'

Eight states and the District of Columbia filed a motion in federal court Tuesday seeking to retain the rules.


“The borrower defense regulations provide critical protections for borrowers who were subjected to misleading and predatory practices by their postsecondary institutions,” the motion says. It was filed in the case California Association of Private Postsecondary Schools v. Betsy DeVos.


Massachusetts Attorney General Maura Healey added that she plans to sue the Education Department “to defend these critical regulations and the rights of our students and taxpayers.”


“This is a betrayal of students and families across the country who are drowning in unaffordable debt,” Healey said in a statement.

Sorry snowflakes, you may have to repay for those Cancun trips all by yourselves...and, no, "I do not recall" the trip is not a valid excuse whether it's true or not...that only works for Hillary and email scandals.

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Cognitive Dissonance's picture

Give the guys (and gals) a break. They were under the influence.......of excess fiat.

Why do the bankers get a free ride from consequences but not everyone else. Either jail the bankers or free the students.

<This message brought to you by Bernie Sanders.>

Alt RightGirl's picture

Those whores and betas (aka students) will feel the bern now.

That would be their FIRST LESSON in ECONOMICS: how to sell your ass in servitude for a gender studies useless diploma.


81 Percent of Americans are “Concerned About Declining Moral Behavior in Our Nation”

El Oregonian's picture

When there is no price to pay everything becomes cheap.... Until the consquences demand full price in payment.

Never One Roach's picture

Taxpayers should be forced to pay for the parteeing and booze and hookers that students are forced to endure for 6 years of undergrad!


...oh, wait a second....

tmosley's picture

Sorry, folks. It's either give students their right to declare bankruptcy again, or revoke everyone else's right to bankruptcy. Anything else results in an age-based civil war.

Probably not the outcome the old people want.

carlnpa's picture

There are two types of government student loans, subsidized and unsusidized.

These start a 5500/yr for a dependent freshman and cap at 7500/yr for a senior, 27000 total more or less max from the feds, for four years.

The kids get in trouble when the banks offer them 100k per semester with the stroke of a pen, these loans are not government guaranteed but they still are not dismissable in bankruptcy.  The ultimate in vulture lending to vulnerable kids.

Make the direct bank loans dismissable in bankruptcy, the banks will instantly stop making these loans.  The banks should not be making them regardless.

Zero_Ledge's picture

"Unfortunately, in the Obama administration the lines between victim and perpetrator were often blurred to be point of being interchangeable. "

Hmmmm.  Speaking of which:


Qatar has signed an agreement to buy up to 36 Boeing-made F-15 fighter jets from the United States, despite President Trump’s harsh words for the country after several Gulf states moved to isolate Qatar.

Qatari Defense Minister Khalid Al-Attiyah and U.S. Defense Secretary Jim Mattis completed the $12 billion deal on Wednesday in Washington, the Defense Department told Bloomberg.

The sale “will give Qatar a state of the art capability and increase security cooperation and interoperability between the United States and Qatar,” according to a Pentagon statement on the deal. 

Qatar’s defense ministry, meanwhile, said in a statement that the deal will lead to “closer strategic collaboration in our fight to counter violent extremism and promote peace and stability in our region and beyond.”

President Obama in November authorized the sale of up to 72 F-15s for $21 billion, but the agreement was seen as in jeopardy following last week, when Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut diplomatic and economic relations with Qatar. The countries said there were renewed concerns that Qatar is helping to fund terrorist groups and was too close to Iran.

U.S. and Qatar relations were then muddled when Trump seemed to celebrate the dispute and even took credit for the decision.

“During my recent trip to the Middle East, I stated that there can no longer be funding of Radical Ideology. Leaders pointed to Qatar - look!” Trump tweeted Tuesday.

“So good to see the Saudi Arabia visit with the King and 50 countries already paying off. They said they would take a hard line on funding …. extremism, and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism!” he continued later.

Trump doubled down on his position Friday during a press conference at the White House. 

“The nation of Qatar has unfortunately been a funder of terrorism, and at a very high level,” he said. “I've decided, along with Secretary of State Rex Tillerson, our great generals, and military people, the time has come to call on Qatar to end its funding.”

luky luke's picture

"the lines between victim and perpetrator were often blurred "

As if they're not blurred with the Federal Reserve when they stole $ 30 TRILLION in 2008. But pick on the little guys.

baghead's picture

I think those fighter jets sold to Qatar,just got more expensive.Maybe Trump was using a negotiating tactic.As long as the terrorists don't fly the jets,I think it won't matter.

desirdavenir's picture

you just forgot to mention that the $110bn sell to Saudis was anything but. There a great article on wolfstreet explaining why this is just recycling of old news. Probably ZH doesn't want to confront its snowflake Trump cheerleaders on the reality they've been con'd all the way.

11b40's picture

Maybe, but you have to wonder who wrote this article under the Tyler name.  Was it a banker, or a college president?

goober's picture

You do know Tyler Durden is not a real person right, like Mac Slavo ?

johngaltfla's picture

Massive global flooding due to excessive snowflake melting in 5, 4, 3, 2......

metastar's picture

Maximum personal freedom goes hand-in-hand with maximum personal responsibility ... for better or for worse.

Mtnrunnr's picture

Let me make this as clear as possible: most students with insane debt did not go to Cancun. Many got a STEM degree and can't find a job after 4 years in school with >3.0 GPA and then got a specific certificate afterward. Removing student protections is a bad idea. We're already fucked, fucking us more isn't going to help anyone find more money for the tax payer. They'll just end up paying more laywers to slap penalties on people that can't pay. Perhaps stop lending to people?

goober's picture

Nobody forces anybody to take out any loan? are you kidding or just stupid ? Same as nobody makes anybody stick a needle in their arm full of dope of any flavor ? And how many tattoos and I phones do taxpayers get to pay for ? What is wrong with actually realizing you cannot afford something and do something a bit different to get there ? Like do without a few trinkets and unnecessary shit until you can actually afford it. Not exactly a new idea or any kind of torture Hey ?

Paul Kersey's picture

So many of the online "colleges" prey upon ex-military, but billionaires, like DeVos, the wife of a billionair MLM scammer and the sister of a government subsidised war profiteer,  believe that our former armed forces people deserve to get fucked. The author of this article lumps these working class folks in with those they like to call "snowflakes". At least Trump U (aka Fuck U) gave the ripped off "students" their money back. Although, that wasn't done voluntarily. It was done, because Donald "I never settle" Trump folded like a wet suit.

Creepy_Azz_Crackaah's picture

Becasue people are too stooooopid to know what loans are.  They need the smart people in gubmint to hep them.

Paul Kersey's picture

The "gubmint" indemnifies the TBTF banks (that issue the student loans and harvest the interest from those loans) from student defaults. The taxpayers pick up the losses. It's just one more instance of TBTF banksters privatizing the profits and socializing the losses. This happens "becasue people are too stooooopid to know" that the gubmint works for the money changers and against the working folks.

LetThemEatRand's picture

"Why do the bankers get a free ride from consequences but not everyone else."

That, as Hamlet said, is the question.

Just like the 2007/2008 banking "crisis."  It was largely brought on by zero lending standards, securitization of mortgages, etc, all of which enriched a few who knew full well the loans would not be paid back.  When TSHTF, the banks were bailed out while the borrowers and those who "invested" in the securitized loans lost everything.

Taking responsibility is great when it applies to everyone.  When it applies only to the serfs, there is a real problem.

Never One Roach's picture

The colleges who are part of the education in this loan process should be "on the hook" for at least 50% of debt so they have some skin in the game to actually teach the kids.

How about instead of innocent taxpayers guaranteeing the loans, that colleges' teachers' pension fund guarantee the student loans at that college.

In fact, since taxpayers are not part of any of the loan process OR the "education" they should have zero responsibility for any of this.

Fair and balanced!

LetThemEatRand's picture

Government backed student loans are a perfect example of good intentions gone horribly wrong (not to say there weren't bad intentions, too).    The proof is all over the place that they are a bad idea. End them tomorrow and let the system reset.  All of the crap colleges would go away and the good colleges would need to lower tuition by huge amounts, making real colleges affordable again and getting rid of diploma mills all in one fell swoop.

desirdavenir's picture

The system is anything but good intentions gone wrong. From its inception it's based on a coalition of selfish taxpayers who just want to pay less while providing the same benefits (at least in appearance) and of greedy businessmen who saw a great opportunity. STaxpayers who want to pay less mandate their states to stop funding higher education, which is turned into a market (must be better, right ?), which permits scam university to profit from gullible students. End result: everyone pays more for a worse education, and the price difference goes to billionaires. Who are the sheeps ?

goober's picture

Far more accurate and fair to hold them all responsible for their own shit ? makes much more sense

drendebe10's picture

WTF. I repaid all my student loans myself on my own outta my own gawdam pocket. No one helped me. How about they pay my mortgage & car loan off.  Fukem. Fukemall. I am getting sick n fukn tired of all this freebie boolsht for people who contribute nuthin, dont work & pay no fukn taxes. Fukem.Fukemall..  Buncha lazy azz turds.. 

ConnectingTheDots's picture

By your writing, it looks like you may have had student loans, but you never went beyond the freshman year.

slimycorporatedickhead's picture

Once again the government causes the problem and then scrambles to be the solution, which causes more problems. Easiest solution: Leave student lending to the private sector. You must convince a bank or lender that you are worthy of borrowing the money and that you are worth the risk, and prove that you will be able to pay the loan back.

As it is right now, anyone with a pulse can take on student loan debt, therefore the value of a university degree becomes less valuable. Its so simple that its not even worth talking about. Gov creates the problems and then offers the solution, and the solution is more gov. Lather, rinse, repeat.

desirdavenir's picture

You mean the boomers caused the problem by not funding with their taxes universities with a sound curriculum while they freeloader on higher education when it was cheap and state funded ?

MK13's picture

Let's get this straight. Looking can be down anywhere, it's when you get to play with it, it's worthwhile - so it's just a tease.

Lost in translation's picture

Oh my.

Time for more "resistance" huh?

Dr. Engali's picture

Why not a frontal picture Tyler? It's not like my kids are reading this.

Critical Path's picture

Everyone holding point and shoots or camcorders.... spring break circa 2000

Cognitive Dissonance's picture

Strange, but the woman in the image looks just like the assistant attorney general for the great state of Alabama, albeit much older.

Sorry, need to clean my glasses.

totenkopf88's picture

Why have tuition- or taxes-  at all when the Fed can print trillions in Judefetzen and give it to the banks to fuck around with instead of helping US citizens?

Ajax-1's picture

You are correct. Since most of our politicians tell us that deficit's don't matter, why does anyone need to pay taxes.

nmewn's picture

But but but...wut about all da Faaarrreee! stuff?!

Clearly the President has now identified himself as the Trump-Hitler-Putin has always was ;-)

totenkopf88's picture

The MIC are bigger tit suckers than any college kid will ever be

nmewn's picture

So, if I get your drift, you're saying fiat created from thin air and not having to be paid back is a good thing as long as its stuffed into the bikini bottom of your preferred interest? 

Obviously a Princeton economics grad. 

Cognitive Dissonance's picture

How many times have I told you to stop playing with your food and just eat it? ;-)

Boss Tweed's picture

hey cd after 9years, ur still a piece of filthy irrelevent dog shit :D


Miss Informed's picture

A lot of good love could be had for the $322 million per plane price tag of an F 22 aircraft and no one would have to die.

goober's picture

seems the simple truth is everything our government touches turns to shit at either end of the specrtrum, for the same reasons, free shit and greed wheer nobody is held responsible for their own fuckups ?

Bottom line seems BHO bought a lot of votes/support with all manner of free shit. Now we get to see how stupid it was ?

goober's picture

seems the simple truth is everything our government touches turns to shit at either end of the specrtrum, for the same reasons, free shit and greed wheer nobody is held responsible for their own fuckups ?

Bottom line seems BHO bought a lot of votes/support with all manner of free shit. Now we get to see how stupid it was ? Just like we know how stupid corp welfare is

goober's picture

so curtail them all , simple solution

Endgame Napoleon's picture

I do not think it is fair for small businesses (and students from other eras) to have to pay their loans, with current borrowers getting better treatment. My ex and I shared a car, never bought one piece of furniture and went out to eat less than 10 times in 7 years of marriage so that we could pay our small business loan in 5 years. It was twice as much as many students borrow.

It is bad to spend your student loan money on beer and beach trips. However, the government pays BILLIONS upon billions to support other types of bad behavior, namely having a bunch of kids you cannot afford outside of marriage.

That will land you free groceries and free rent in a dangerous area of a city OR subsidized rent in a mixed-income apartment that is nicer and in a safer area of a city than most grads can afford. Every time your sexual intercourse outside of marriage results in another birth, you'll have a lower rent bill.

You will also get monthly cash assistance, free energy and a scott-free Child Tax Credit check of up to $6,269, with no income tax required.

I have always wondered how kids have so much money for traveling in college. Now I know. I do not have much empathy for that. But the students are not the only ones living the bacchanalian life on the public dime, and unlike the students, other groups do not have to pay a dime back.

Most of the welfare/taxfare moms did not stay up all night cramming at the last minute for their non-utilitarian PSY 101 or POLS 101 classes at a for-profit, state accredited or private college, no, but they sure do spend a lot of their free money from taxpayers on self indulgences, including plenty of out-of-town trips with boyfriends, lotto tickets, tattoos, lingerie and other things that have nothing to do with taking care of baby.

There are some cases where students were truly duped, too, and anyone would be sympathetic. Working in insurance, people tell you their stories. One time a girl who had married, and whose husband left her after they had 1 child and bought a house, told me how she was struggling to cover everything, working as a medical assistant.

The way you get assistance as a single mom is to make as little as you can and have multiple children. This girl made very little, God knows, but she was not "working the system," as it is called. She did have child support, but not much due to the father's income level.

She was able to get a job at one of the fanciest places in town with this degree, but as with almost all of the jobs in my state, including the ones in nice offices, it paid nothing--$12/hr.

So, she wanted to transfer her credits from a for-profit 2-yr school to get a real RN degree at a state university, and nothing would transfer.

She was very upset about this and could hardly make herself go through the whole thing again, doing all of the coursework over again for a full 4-yr degree.

Do I feel sorry for this girl, yes. She still had loans left over from the 2-year degree and, although I did not really know her, I sincerely doubt that she was a big partier. Some well-meaning individuals do get s*****d by the system.

I do not think that SOME people should have to pay their loans, while others get off, but some things are deceptive in the student loan system. I would never have fallen into that particular trap because of people in my environment who know the rules of transferring credits, but although this girl majored in a very practical area and is smart, she simply was not informed about the different types of schools. And no one helped her before signing her up for the loan.

People in practical areas, like the medical field, should be helped to transition to something that will definitely cover their household bills if they can get through the coursework.