Trump’s Student Loan Plan is Bad Economics

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At a campaign stop in Columbus, Ohio, one month before Election Day, Donald Trump shared his plan for addressing voters’ growing concerns about student loan debt.Trump’s student loan repayment plan came late in the campaign cycle, long after Senator Bernie Sanders and Secretary Hillary Clinton released their respective plans, both of which would have increased government intervention in higher education, further distorting the already-convoluted education and student loan markets.

At the time of his speech, Trump’s proposal seemed likely to elicit support from voters, especially among millennials concerned about college affordability and rising levels of student loan debt. From 1980-2014, the cost of attending college rose by nearly 260%. Total student loan debt is nearing $1.25 trillion, and over forty-three percent of former students who borrowed from the federal government are in default, behind on their payments, or aren’t making payments on their federal student loans.

Free market advocates had hoped that Trump’s proposals would constructively tackle the causes of the student loan bubble. Alas, this was not to be. Instead, Trump’s plan bears more similarities to alternative plans released by Obama, Clinton, and Sanders than many conservatives would like to admit.

Called “the most liberal student loan repayment plan since the inception of the federal financial aid program” by The Washington Post, Trump’s proposal would cap repayment at 12.5% of a borrower’s discretionary income. Furthermore, a borrower’s remaining student loan balance would be forgiven after he or she makes their full payments for 15 years. While it’s possible that Trump has considered restoring the pre-2010 system, in which private banks (instead of the government) issue student loans, such loans would still be subsidized and guaranteed by the federal government, eliminating much of the risk that incentivizes banks to engage in prudent and sustainable lending.

Basic economic principles help us predict how Trump’s student loan plan would affect the greater economy and the financial welfare of individuals. At any given time, there exists a limited amount of funds available in capital markets. This capital can be directed toward any number of alternative uses (home loans, car loans, business loans, etc.). But government artificially boosts demand for student loans when it intervenes in the market by enabling student borrowers to repay less than the balance of their loan. This artificial demand for student loans bids capital away from alternative uses, making it more difficult for families and businesses to receive loans for other important purposes.

Moreover, the cost to taxpayers would be steep. The federal government (and, by extension, current and future generations of taxpayers) would be responsible for paying the remaining balance of everyone’s student loan debt after their loans are forgiven. Colleges and universities would grow even richer, receiving billions of dollars as wealth is redistributed from America’s taxpayers to its institutions of higher learning.

Today’s college tuition is so expensive because easy-to-acquire federal student loans have rapidly boosted demand for higher education. Unless supply keeps pace with demand, prices will inevitably rise. Millions of students have become burdened with previously unimaginable levels of student loan debt needed to finance schooling that has been made artificially expensive by government intervention.

If Trump had been sincerely concerned about college affordability and the soon-to-burst student loan bubble, his plan would have eliminated the federal student loan system entirely. As Jason Morgan predicted in his recent article for Mises Wire, “Without the artificial demand generated through taxpayer-funded subsidies, universities [would] be forced to lower their tuition prices to meet what students and their families are able and willing to pay. This new reality [would] force higher education institutions to adapt to the needs of students.”

Instead of addressing the underlying cause of the problem (namely, the inflated cost of education resulting from federal education subsidies), Trump’s proposal attempts to mitigate the regrettable effects of government’s intervention into the student loan market by forgiving the debt of millions of working professionals.

While Trump’s proposal might score him political points among millennials saddled with an excessive volume of student loan debt, it certainly doesn’t make good economic sense. We might momentarily feel better if our student loan payments are reduced and our balances are forgiven, but we will all be poorer because of it.


This article was originally published by The Mises Institute: https://mises.org/blog/trumps-student-loan-plan-treats-symptoms-not-disease.

The Morning After.

America has decided. Mr. Trump will become President Trump on January 20, 2017. Until about 9:00 pm last night, I adamantly believed it was impossible. I was wrong.

Republicans and fellow conservatives: This is your opportunity to prove that principles supersede party by holding President Trump’s feet to the fire. The Republican that will occupy the White House is not a conservative. He doesn’t share your values. He’s not a fiscal conservative, he’s not a social conservative, and he’s not a constitutionalist.

Don’t relinquish your principles and values to defend the man in the White House. Don’t sacrifice years of hard work for momentary political gains. Don’t do anything that may compromise your character and your witness.

Our Constitution, our prosperity, and our traditional Judeo-Christian values are more important than defending the reputation of any one man. Don’t forget that.

It’s time to start praying that God gives wisdom, prudence, discernment, and protection to President-elect Donald J. Trump: “Therefore I exhort first of all that supplications, prayers, intercessions, and giving of thanks be made for all men, for kings and all who are in authority, that we may lead a quiet and peaceable life in all godliness and reverence. For this is good and acceptable in the sight of God our Savior” (1 Timothy 2:1-3).

Election Day.

No matter who wins the elections tonight, I will wake up tomorrow morning recommitted to continue fighting for economic liberty, religious liberty, and true justice. In season and out of season, I will keep sharing what the Bible says about the pertinent civil and social matters being debated in the public square. 

Ronald Reagan once reminded us that freedom is never more than one generation from extinction. We may be on the leading edge of dark times for our nation. But as the Apostle Paul tells us, “Let us not grow weary while doing good, for in due season we shall reap if we do not lose heart” (Gal. 6:9). 

God has given Americans a birthright of liberty. I, for one, will not squander the blessings of Divine Providence or the heritage of my forefathers. I ask that you join me and past generations, who were willing to sacrifice their lives, fortunes, and sacred honor, to defend what is true, right, and good. 

And after we have fulfilled our duty to God and our country, we can rest easy at night, knowing that our ultimate citizenship is in Heaven and that we serve the sovereign King of Kings whose Kingdom won’t be shaken.

“Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. Heaven knows how to put a proper price upon its goods; and it would be strange indeed, if so celestial an article as FREEDOM should not be highly rated” (Thomas Paine, The Crisis).

What Would Life for Christians Look Like Under a Clinton Presidency?

hillaryclintonwikileaks_c0-120-3829-2352_s885x516During the second presidential debate, Gorbah Hamed, a Muslim woman, asked Donald Trump to address her fears about living as a Muslim in the United States following the presidential election.

This isn’t the first time the media has asked questions about what life for Muslims would look like under a Trump presidency, and rightly so. Ever since Trump infamously proposed banning Muslims from entering the United States, journalists have been eagerly raising questions about whether the Republican nominee is a closeted Islamophobe, anxiously awaiting the opportunity to deny Muslims their constitutional rights.

Ironically (or not, depending on your opinions about the news media), I haven’t yet heard journalists ask an analogous question of Secretary Clinton: What would life for Christians look like under a Clinton presidency?

What reasons has Mrs. Clinton given for Christians to be so concerned about their constitutional right to live according to the precepts of their faith and the dictates of their consciences?

First, Clinton supports coercive non-discrimination statutes that trample upon the consciences of religious organizations and Christian business owners.

In remarks made to an event hosted by the militantly anti-Christian Human Rights Campaign, Clinton voicedher support for the Federal Equality Act. Critics warn that the Federal Equality Act would dismantle the essential pillars of religious liberty protections by amending the 1964 Civil Rights Act to include protections for sexual orientation and gender identity.

If signed by President Clinton, the Federal Equality Act could be used to compel Christian colleges to allow transgender biological males to live in female dorms. Likewise, Christian ministries should expect penalties if they refuse to employ practicing homosexuals. And Catholic adoption agencies could lose their licenses to operate if they follow their Church’s teaching by refusing to provide their services to same-sex couples. (Catholic adoption agencies have already stopped operating in both Massachusetts and Illinois because of similar state non-discrimination laws – an unfortunate development for the tens of thousands of children waiting to be adopted every year).

Mrs. Clinton also decried the Supreme Court’s ruling that allows Christian-owned companies like Hobby Lobby to refrain from providing abortifacients to employees. She called the Supreme Court’s affirmation of the business owners’ right of conscience “deeply disturbing.”

Under a Clinton administration, religious organizations and Christian business owners who don’t agree with the federal government’s revolutionary legal assaults on life, marriage, and gender should anticipate being given two options: repudiate the doctrines of your faith or expect the fist of government to squash you.

Second, consider Hillary Clinton’s comments at the 2015 Women in the World Summit regarding abortion. In her keynote address, she expressed her regret that too many women are “denied” reproductive healthcare and expressly stated that “deep seated cultural codes, religious beliefs and structural biases have to be changed.”

Christians find Clinton’s radical positions on abortion even more frightening when they realize that the Progressive Left, which is financing Clinton’s candidacy, supports using the federal government to force Christian doctors and hospitals to provide abortions, violating the most sacred human right protected by the First Amendment.

Third, Mrs. Clinton would nominate far-left judges who share her vision to limit the constitutional rights of Christians. The battle for religious liberty will be fought in court – and if Hillary Clinton is able to nominate judges of her choosing, that battle for religious liberty will be lost.

Christians have a lot to fear from a Clinton administration concerning their rights. Mrs. Clinton has made it clear that she’s not going to respect the constitutional protections of religious liberty, freedom of conscience, free speech, free association, and liberty of contract.

The mainstream media’s silence about Mrs. Clinton’s hostility toward the rights of Christians is revealing. Muslims are justifiably concerned about Mr. Trump rising to our nation’s highest office, and it is appropriate for the media to share those concerns with the public. So, too, are Christians justifiably concerned about Mrs. Clinton winning the election – but their concerns are being dismissed and buried by journalists with a political agenda.


This op-ed was originally published by Family Policy Institute of Washington.