Debbie Cochrane, TICAS Executive Vice President joins Yahoo Finance’s Aarthi Swaminathan and the Yahoo Finance Live panel to discuss what will happen to student loan borrowers depending on the outcome of the 2020 presidential election.
ZACK GUZMAN: I want to take a look at how the presidency might impact an important issue for 40 million Americans out there, as the country as a whole holds about $1.6 trillion in student debt. So let's focus in on that issue here with our next guest. Debbie Cochrane is executive vice president at the Institute for College Access and Success. Also bring in here Yahoo Finance's Aarthi Swaminathan as well here.
Debbie, I appreciate you taking the time to chat. Obviously, this is an important issue for a lot of Americans here. So what should they know about how this election at the top office here could change the discussion right now around loan forgiveness, pausing loans in the pandemic? What are you seeing play out?
DEBBIE COCHRANE: Thanks for having me. This election has enormous implications for student loan debt. The two candidates that are on the ballot, Vice President Biden and President Trump, have very different visions of college costs, college affordability, and student loan debt.
I mean, President Trump's first term has really focused a lot on deregulation, not necessarily investing more in public higher education or financially that brings college costs within reach, but rather, focusing on allowing customers and consumers to make better choices or more informed choices about where to go to college. A lot of those efforts have really been about unleashing the for-profit college industry by rolling back regulations designed to keep that industry in check.
Vice President Biden has a very ambitious agenda that would include making public higher education tuition free for students and also doubling the Federal Pell Grant. So both of those factors on the president-- on the Vice President Biden agenda would lower cost to students and therefore reduce student loan debt.
AARTHI SWAMINATHAN: Hey Debbie, you mentioned for-profit colleges. They've already seen an uptick in enrollment. So I mean, we've already loosened a lot of the regulations that were put in place to hold these schools back. So what would happen in a Trump administration if we get another four years?
DEBBIE COCHRANE: Well, there's more deregulation that could happen, particularly with respect to financial responsibility scores, and how do we know that the schools that are enrolling students at taxpayer expense and incurring student loan debt as a result are actually responsible and are not going to close, you know, within the coming years before a student can finish their degree?
I think right now is a very sensitive time for the for-profit college industry because we've seen, because of the pandemic, all schools shift online. And this is a market that was very heavily weighted towards the for-profit college industry already. And it's an industry, it's a part of higher education that's very hard to oversee because it's not necessarily like a regulator can go to the campus and watch the faculty or look at what the facilities are like.
Many of these enrollments in for-profit colleges are across state lines. It's harder for federal governments. It's harder for state governments to actually look out for problems. And now, we're likely to see these problems grow exponentially because of the pandemic.
AARTHI SWAMINATHAN: And, you know, putting all politics aside, we have had some efforts to reform the student loan system to get away from what we think is a crisis. Do you think we're really getting closer to fixing it? Sorry, I'm being skeptical here.
DEBBIE COCHRANE: Well, I think there are some steps in the right direction. You know, federal policymakers across both sides of the aisle earlier in the year, in the early days of the pandemic, put in place a federal student loan payment pause.
And that means for most federal student loan borrowers, they have not needed to make payments on their federal student loans during the pandemic. Then that pause should be extended and applied to all borrowers, not just most federal student loan borrowers. But that has been something that's been a bipartisan concern, and there's bipartisan consensus. And that will be something that needs to continue to be extended.
I also think there's more agreement certainly around certain types of borrowers that need to-- you know, that deserve federal student loan cancellation. Certainly students who were misled by their colleges into enrolling and into borrowing, they-- federal law entitles those borrowers to student debt cancellation.
AKIKO FUJITA: Debbie, what happens if that pause isn't extended?
DEBBIE COCHRANE: Well, currently, that pause goes through December 31st. And at that point, borrowers would need to reenter repayment. And so that will be an enormous task for the Department of Education to make sure that those borrowers are reconnected with repayment plans that are manageable for them. Because if-- you know, many of them may have just gotten out of the habit of paying those student loan bills month after month.
The good news for those borrowers is that even if their economic situation has not gotten steady over the last few months, they still have access to an income-driven repayment plan that will allow them to make payments based on their income, rather than just their debt. So all hope is not lost if people still can't afford their student loan debt. But it does mean they need to get back into that rhythm.