Earlier this week, the silence of the Republican National Convention on student loans was duly noted. This observation was a little unfair since this accusation of negligence was hastily made on the second day of the multi-day Republican event. Sure enough, the third day of the convention held the answer to the burning question of where the Republicans stand on student loans. Thus the GOP platform has been set.
While it has been predicted for some time, the finalization of their policy direction is refreshing to hear especially since the Democrats have established their direction for years. The party is not unanimous on this policy despite establishing a direction.
In short, the Republicans lean towards privatizing student loans which means eliminating the Department of Education’s influence on student loans. Of course, this is in direct contrast to the Democratic Party.
Over the previous decade, the government has largely reduced the role of private banks in student loans while the federal government essentially picked up the slack. During that time, tuition has risen, but the only thing exceeding tuition costs is the student loan debt tally which is over $1.3 trillion.
The events mentioned above set the stage for two different directions: fix it with federal involvement or fix the problem without federal involvement. This creates a division that our two parties is more than happy to accentuate. The Democratic party wants to increase government influence on student loans by implementing more student loan policies. Now the Republicans want to limit government influence by shifting more responsibility to private banks and lenders.
On paper, this does not sound like such a bad idea. Statistically speaking, private loans have a much better track record. These loans have lower default and delinquency rates than their federal counterparts. On another note, such a move would increase the value of the private consolidation business considerably which is also in direct contrast to the Democratic refinancing initiative.
Another consideration is the outstanding student loan debt of $1.3 trillion. Over 90% of that tally consists of federal loans. By this logic, the Republicans are geniuses, but not everyone agrees, even those within the Republican party.
The push for private loans contradicts directly with certain segments of the Republican party such as the Tea Party Republicans and business-oriented Republicans. These groups advocate Common Core and national education standards. As such, this contradicts with some of the policies that the Republican candidate, Trump, has vouched for such as the call for competition in education by incentivizing local governments to take charge. Trump wants students to go to schools of choice during high school and college with the help of private students loans. All in the spirit of competition.
At any rate, it really is not astonishing that the Republican party takes this direction. In recent history, the Republicans characteristically vouch for less government influence which ties directly in with de-emphasizing the Department of Education.