Trump Moves to Cut Off Student Loans for Tons of Degrees
“The Los Angeles Times reported Wednesday that the Education Department has finalized a rule that will force schools to prove that the loans students are taking out are paying off.”
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At its roots it’s commendable: a college graduate shouldn’t earn less than a student who didn’t attend college. Makes sense.
The devil is in the details.
However this is problematic in that teachers or social workers often make less than plumbers; students with unpaid/low pay internships on their way to professional school (premeds on a glide year, Peace Corps, ppl in think tanks before IR jobs..) would all be wiped out – after one or two years in internships then grad school their earnings will be very very low whereas their earning potential would be ahead of them.
What about students who change majors? Think of the 2/3 who start in Engineering and end up switching, how would they be counted?
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I don’t even know what to write here.
I have one kid who is a self supporting freelance musician, and we totally agreed with his course of study for both his bachelors and masters degrees. Let’s just say, I believe we need the arts in our lives. My kid took the Direct Loan because it helped our cash flow. Would this still be allowed? It doesn’t sound like it.
My second kid as like the one @MYOS1634 described above. After undergrad, did a 27 month Peace Corps assignment (which 16 years later still comes up in her job). After the PC, this kid decided to apply to medical school…a non-traditional applicant. Worked as an EMT B (let’s just say they don’t earn a lot of money). Then applied to and attended medical school for five years (was chosen for a scholar program that was teaching, research, and mentoring…but didn’t pay a dime). Then residency…which for those of you who don’t know, is NOT a high paying job. Then a fellowship, which was better but still not exactly high paying. In 2025, this kid got her first attending physician job…15 years after she graduated from undergrad school. Let’s just say, she would be a negative statistic for this proposal.
And my kid isn’t the only one like her who is a doctor. Many take glide years, or work for a few years before even applying to medical school.
I think it’s awful that folks think college should be an immediate path to a high earning job. Let’s just say…we need some of those lower earning jobs to make our world spin a little better.
Do I sound disgusted enough?
As you all know, my career was as a public school speech pathologist. Entry level requires a masters degree. Pay varies, but in some parts of this country, even beginning masters salaries aren’t exactly high flying. I think I would be a negative statistic for this proposal also.
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There are no words for how disgusting this is.
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When they start enforcing this with for-profit colleges I’ll believe that they care. As it is, for-profits with 15% graduation rates can still suck up colleges loans from students who the colleges knows will never graduate.
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If your degree doesn’t pay enough, you can’t borrow. Federal loans cut for low-wage programs says that 3% of bachelor’s and advanced degree programs at non-profit colleges are expected to fail the earnings test, while 33% of programs at for profit colleges are expected to fail.
The test is whether the median earnings for bachelor’s graduates are higher than the median earnings of high school graduates. For advanced degree programs, the median earnings of graduates are compared to the median earnings of bachelor’s degree graduates in the field or overall, whichever is lower.
The article says it’s per major, not per college.
If this closes predatory for-profit colleges, excellent!
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What a stupid idea. So teachers and social workers and anyone doing these critical jobs who doesn’t make a lot of money arent going to get loans? I have to remind myself that it can always get worse. And this helps how?
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Does this include the direct loans that some students use to fund community college courses of study? There are two year degrees that don’t necessarily pay well, but are terrific stepping stones to what’s next.
I guess biology majors are out of luck. After undergrad, many take lower paying jobs while preparing for professional schools or grad schools.
How about this one…one of my kids had a double major in an engineering field, but never worked (and never will work) in that field. Does that make her OK. Her salary for the first 14 years out of undergrad was low…but she did have a degree that could have netted her a higher paying job (in a field where she had no desire to work).
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I also wonder about students in majors that prep for religious service of various kinds. Probably not people who should take out massive loans, but saying “no federal loans” at all seems harsh. I didn’t have a major that prepared for a religious role, but I felt called and chose a low-paying ministry job for several years after graduation. I saved on living expenses in a low-COL area by living with roommates and made reasonable payments on loans. I feel for those called to religious roles that require a particular degree, because they seem likely to be impacted by this rule.
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Agree. And what’s particularly galling is that it’s as if one hand in the federal government doesn’t understand or talk to the other hand.
Clergy members qualify for a “parsonage allowance” via the IRS. This means that their taxable income does NOT reflect their actual wages if the imputed value of their housing were added back. Or the value of them living in a congregation-provided home. Teachers at boarding schools often have their living and food subsidized by their employer- the value of which is not reflected in their compensation. Public health workers who are staffed in remote locations often qualify for either subsidized or free housing. And employees of non-profits often have VERY generous benefits ($5 copay for doctor’s visits and employer paid health insurance– no employee payment at all). So a “low” salary at one of these organizations needs to be grossed up by a pretty significant amount to show the actual, realized compensation.
Which would you rather- $70K salary but terrible health insurance which costs you 15K per year to insure your dependents, or a $50K salary with free housing and zero dollar cost health insurance??? The math ain’t mathing with this new rule.
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I assume the rationale is to reduce student loan defaults by linking borrowing limits or eligibility to majors that have traditionally lower earnings potential. This approach seems clumsy and probably wont solve anything. I don’t agree with it.
However, a larger issue is the overall scale of student loan defaults. Student loan debt associated with borrowers in default has reached roughly $220 billion, and millions of borrowers are behind on or have defaulted on their loans. Ultimately, when borrowers cannot repay, taxpayers eat the cost.
Shutting down loans for a bunch of for profit schools seems like a step in the right direction.
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Based on the Los Angeles Times page, some of the more vulnerable programs include:
- Graduate programs in social work.
- Religion programs.
- Arts programs.
- Undergraduate certificates in things like cosmetology, massage therapy, and film.
Regarding social work, most hiring is by governments, which seem to be reluctant to spend money addressing social work problems, even though the costs of unaddressed social work problems become more expensive when their police departments end up with them.
Regarding arts, arts tend to be elite or bust when trying to make a living or career from them, so no surprise that median pay levels are low.
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That’s a pretty sweeping generalization. My kid is a freelance musician. He is self supporting, and is doing what he loves…and bringing lots of joy to others through the arts. I personally think that is valuable…and would hat to see students like him not able to follow their arts dreams.
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Seems like he is elite relative to most musicians in being able to self-support solely through music (perhaps also he may be helping himself by having low financial needs and wants).
But that may not be typical. According to https://collegescorecard.ed.gov/ , the post-graduation median earnings for graduates who used federal financial aid were:
| School | Degree | Earnings |
|---|---|---|
| Berklee College of Music | BM music | $38,617 |
| Curtis Institute of Music | all | $20,026 |
| The Julliard School | BM music | $32,842 |
| all US colleges | BA or BM music | $42,892 |
For comparison, COE - Annual Earnings by Educational Attainment says that in 2022, the median pay for high school graduates age 25-34 was $41,800. For those with a bachelor’s degree, it was $66,600 overall.
The LA time article does say the rule will mostly effect for profits.
The vast majority of bachelor‘s and advanced degree programs at public and nonprofit colleges and universities are expected to be safe, with about 3% expected to fail, according to the department’s estimates.
However, about 33% of programs at for-profit schools are expected to fail.
For the degree programs that do fail (the 3%) perhaps the colleges and universities can redo the programs to require stronger programs to get people into higher paying programs. It is not going to be on a person to person basis to qualify, but on the average of the graduates (and I assume those who borrow but don’t complete a program) 4 years after graduation. They don’t have to be making huge amounts, just about minimum wage in that state.
One of the problems is that some people are only working part time (child care, hair stylists) and don’t report their tips. Well, they have to report tips! Tips are income, and while there may be a credit for those tips on tax forms, they have to be reported and then get the credit back. I realize that many workers don’t report tips, but they are required to. When determining their income, the dept of education should be adjusting for part time employment and include the tips. I assume they are getting their statistics from the schools, so the schools should include those questions on questionnaires, like wage per hour (and then multiply by 49), tips, other income (for musicians gig work)
It would be better to target the schools/programs that have high default rates by graduates (or non-graduates) on student loans. It really shouldn’t matter if grads don’t make a lot of money, just whether they are defaulting on loans.
My SIL has an MBA from U of Phoenix (paid for by her employer) and she made a lot of money before and after getting the degree, so her numbers would work to help that school. Her undergrad major? French. She started at U of Chicago, then graduated from Metro State (Denver), then got the good job and they had her get the MBA (at the time there weren’t a lot of online MBAs available and U of Phoenix worked for her) The only other grad I know from U of Phoenix also has a pretty good paying job. But I know that U of Phoenix doesn’t/didn’t have a great track record for the majority of students.
I actually know 4 French majors. None made a dime from that major. All went on to advanced degrees. All made more than a high school grad 4 years out of college.
How does a college explain to the thousands and thousands of school systems in the country that they need to pay their special ed teachers more? Or how do you suggest they “redo” the programs to get people into higher paying work? I have a family member in a state which pays its teachers poorly. She has over 30 years experience as a reading specialist for kids with profound LD’s and other neuro issues. Sure, she could reboot and get yet another Master’s degree which would get her into higher paying work. But what happens to kids when every educational professional decides they’d rather market crypto currency? This person is not an idiot, and understands that she would make more money as a plumber or another trade which does not require college (let alone a master’s degree).
She had loans for both undergrad and grad, and paid them off (one early, one on time). Shouldn’t that be enough?
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They don’t have to, but they could inform students that it is a low paying major especially in X state, and therefore they aren’t eligible for a student loan.
I don’t think it would work that way. The school is going to average all salaries from that major, so while a state may pay their Sped teachers minimum wage, the average is going to be high enough to keep those students eligible for loans. If it is a state school training most of the teachers for that state, and they can’t get the average up to what hs grads without more education are making, then that state has a big problem.
This is all going to be based on averages. Do some nurses or teachers or French horn players not make minimum wage? Yes. Will the average grad from a program make more than the average of what a hs grad without more education be making 4 years post (college) grad? I think so. If not, than everyone should be looking at those programs that are producing such low paying programs. As the article says, most of those programs are at the non-profits and I think that may be easier to prove (that many who paid $25k for a 2 year criminal justice certificate are not making more than those who went straight from hs to the workforce) and that those programs are not benefiting anyone (except the school collecting the $25k) I don’t think it is a leap to assume those loans are the mostly likely to go into default
I read a story about a woman who wanted to join a religious order to be a nun. Problem was she owed thousands in student loans for a degree she got before deciding to become a nun. The order wouldn’t accept her until she paid her debt. She would be taking a vow of poverty so would NOT have a way to pay the loans once she entered the order and would, they assumed, default. I assume they’d make the same decision if it had been credit card debt.
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So…are you suggesting that future students wishing to study the arts should be denied federally funded loans? If so, I very much disagree.
I think this proposal is quite awful.
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No, I am not suggesting that. I am pointing out that arts are among the types of programs most likely to run into trouble with this rule.
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