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The Trump administration is considering selling a portion of the federal government’s $1.6 trillion student loan debt to the private market.
Politico reported that senior Education Department and Treasury Department officials held talks with finance executives centered on selling parts of the student debt portfolio, which covers loans taken out by about 45 million borrowers. However, private investors may not be willing to pay more than what the student loans are worth.
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Separately, the Trump administration is also mulling whether to hire an external consulting firm or bank to assess the student debt portfolio and how it would be valued on the private market.
If student loan debt is sold, how does it affect borrowers?
Why you should care:
If the Trump administration did sell the federal student loan debt, this may impact borrower protection. The sale would also advance President Donald Trump’s efforts to reduce the size and responsibilities of the Education Department.
Separately, if a borrower’s loans were sold to the private market, monthly payments would be sent to a different place. Private markets wouldn’t be permitted to garnish wages or benefits to facilitate the payment of loans, and these entities also can’t offer borrowers more time to repay loans, USA Today reported.
Forbes noted that these recent conversations come as the administration has eliminated some student loan borrower protections like renewing collections on defaulted loans that were paused during the pandemic.
RELATED: Student loan forgiveness program getting Trump overhaul: What’s changing
Since President Donald Trump returned to the White House, his administration has overhauled Biden-era student loan forgiveness policies. Some of these changes have been reflected in Trump’s massive tax bill, including lowering caps on graduate school borrowing for lower- and middle-income people and eliminating economic hardship deferment programs.