"Federal law dictates that such a sale cannot cost taxpayers any money. But, as Eileen Connor, executive director of the Project on Predatory Student Lending, told Politico, executing a deal that benefits both taxpayers and borrowers is nearly impossible. The federal government enjoys extraordinary powers of collection that private lenders do not - such as garnishing tax refunds, disability benefits, and Social Security payments. Absent those collection methods, private lenders make money through higher interest rates and longer repayment plans."
"Mike Pierce, executive director of Protect Borrowers, puts it bluntly: "President Trump and Secretary [Linda] McMahon are hell-bent on squeezing every last dollar out of families with debt." Daniel Zibel of the National Student Legal Defense Network adds that such a sale could foreclose any future possibilities for debt cancellation. In short: privatization means less protection, more suffering, and fewer paths to relief."
Trump administration officials are exploring selling portions of the federal government's $1.6 trillion student loan portfolio held by about 45 million borrowers. Federal law requires that any sale cannot cost taxpayers money. Executing a deal that benefits both taxpayers and borrowers is nearly impossible, because the federal government can use collection tools private lenders cannot, such as garnishing tax refunds, disability benefits, and Social Security payments. Without those powers, private buyers would rely on higher interest rates and longer repayment plans. Advocates warn that privatization would reduce protections, increase suffering, and could foreclose future debt cancellation. The effort aligns with broader plans to shrink the federal role in education.
Read at Truthout
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