The Trump administration is considering selling off parts of the federal government’s $1.6 trillion student loan portfolio to the private market, according to Politico.
The matter has been discussed by senior officials in the Department of Education (ED) and the Treasury Department, Politico reported on Tuesday, citing three anonymous sources. The talks center around the idea of selling well-performing parts of the government’s giant portfolio of student debt, the outlet reported.
The federal government’s student loan portfolio includes 42.3 million recipients with federal student loans totaling $1.67 trillion, according to a Federal Student Aid report released Aug. 21.
Officials have also held discussions on the subject with executives in the finance industry, including prospective purchasers of the student debt, according to Politico. Moreover, the conversations have also included potentially bringing in an outside consulting firm or bank to examine the student loan programs and evaluate how the private market would value parts of the student debt portfolio, the outlet reported, citing an anonymous source.
“The Trump administration is committed to analyzing all aspects of the federal student loan portfolio,” one senior Trump administration official told Politico. “Unlike the previous administration, we are focused on ensuring the long-term health of the portfolio for the benefit of both students and taxpayers.”
The White House, ED and the Treasury Department did not immediately respond to the Daily Caller News Foundation’s request for comment.
During President Donald Trump’s first term, his administration also mulled selling all or part of the debt to private investors, the Wall Street Journal reported in May 2019.
Preston Cooper, a senior fellow at the American Enterprise Institute, told Politico that he was skeptical about the move benefiting American taxpayers.
“I really don’t see a scenario here where taxpayers come out ahead,” Cooper said. “I think the most likely scenario is that taxpayers get less than the loans are actually worth.”
Meanwhile, Eileen Connor, executive director of the Project on Predatory Student Lending, told Politico that “the only way for it to make economic sense is to structure the deal in a way that really short-changes borrowers.”
“It’s important for any potential buyer and for all student loan borrowers to understand that there are certain rights and protections that are part of their loans that can’t be written out because of the sale to a private entity,” Connor continued.
Additionally, Trump’s ED announced in April it would start involuntary collection efforts for student loans in May for the first time since 2020.
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