Trump Making Fake News on Student Loans

On August 21, 2019, Donald Trump made some very cheap news. Across the mainstream media, we saw headlines including, “Trump orders cancellation of student loans for disabled vets“. This sounds great, except that it really isn’t.

For decades, the fact of the matter has been that anyone with a total and permanent disability determination—whether they are a veteran or not—can get their loans canceled. This is a well-established process and, by all accounts, it is relatively easy to do.

From the StudentAid.Ed.Gov page:

A total and permanent disability (TPD) discharge relieves you from having to repay a William D. Ford Federal Direct Loan (Direct Loan) Program loan, a Federal Family Education Loan (FFEL) Program loan, and/or a Federal Perkins Loan or to complete a TEACH Grant service obligation.

To qualify for a TPD discharge, you must complete and submit a TPD discharge application, along with documentation showing that you meet our requirements for being considered totally and permanently disabled, to Nelnet, the servicer that assists the U.S. Department of Education with the TPD discharge process.

All Trump really did, here, was to order the Department to automatically write off these loans (in consultation with the VA), rather than the veterans doing it themselves. The people who haven’t bothered to send in the form likely have forgotten about their loans long ago, so that the government finally cleared it off their books made not one bit of difference for the overwhelming majority of people that this affected. They probably don’t, and won’t even realize this has happened. They have other challenges to worry about.

So this was a very cheap headline; I would call this fake news.

Trump needs to do far better than this. The real heavy lifting that needs to be done lies in the fact that student loans have been uniquely singled-out and, unlike every other loan in this country, are essentially impossible to discharge in bankruptcy court.

The Founders enshrined bankruptcy rights in the Constitution. Men like Thomas Jefferson, Robert Morris, and even George Washington were being wrecked- along with a huge percentage of the citizenry- at the hands of British banks and merchants. It should come as no surprise, therefore, that in Article I, Section 8, “uniform” bankruptcy laws are called for ahead of the power to raise an army, declare war, and even ahead of the power to coin currency!

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