How safe are federal student loans right now?

California students are responsible for a significant amount of federal student loan debt. A series of recent actions by the Trump administration and Congress could have future students re-considering if they want to join that pool.

Those actions include:

• The president has diminished the Department of Education.
• He’s issued an executive order that aims to deny debt relief to public servants whose work he’s deemed “illegal,” including providing aid for undocumented immigrants or gender-affirming care. 
• The administration announced the country's $1.6 trillion student debt portfolio will be transferred from the beleaguered Education Department to the Small Business Administration, which is also laying off employees. 
• Eight million borrowers are in limbo due to lawsuits against Saving on a Valuable Education (SAVE), a Biden-era repayment plan that offered low monthly bills and promised not to let original balances balloon due to unpaid interest. Those borrowers’ payments have been on pause for months.
• Republicans on the House education committee unveiled a plan in late April to offset the cost of extending president Trump's tax cuts by razing the federal student loan system.

Here’s how that last one would work: Currently, the government covers the interest on certain loans while students are enrolled in school. The House proposal — part of a special budget process called reconciliation — eliminates those subsidies for undergraduate students.

The plan also caps loans for graduate students, and it would require low-income students to take more credits in order to receive the maximum Pell Grant award — a move that experts say could result in significant cuts for students with the greatest need.

Should I take out federal student loans?

Against all these changes, is it prudent to take out a federal student loan? LAist reached out to multiple college affordability advocates, and heard back from spokespeople for:

• EdTrust
• The Institute for College Access & Success
• The National College Attainment Network
• The Student Borrower Protection Center

All agreed that, despite the flurry of activity around financial aid, federal student loans are still a good option.

Jessica Thompson, senior vice president at the Institute for College Access & Success, said “federal loans remain the safest way to borrow to pay for college.”

Her advice to current and prospective borrowers: “[Do] not let the conversation that is happening at the policy and political level change or dictate [your] choices.”

Aissa Canchola Bañez, policy director at the Student Borrower Protection Center, warned that if legislators succeed in “removing a federal funding stream that folks have relied on in order to pay for graduate education,” students might be compelled to take out private loans, which have higher interest rates and less protections. Other students may decide not to pursue higher education at all.

“Teachers, doctors, dentists, engineers, social workers — all of those professions require [post- baccalaureate education]. And people who cannot afford to just write a check to pay for their graduate education are going to be locked out,” said Victoria Jackson, assistant director of higher education policy at EdTrust.

The House Republicans’ proposed changes, Jackson added, “would make it harder for people who are already in the workforce to re-skill.” She and the other advocates underscored that additional requirements to secure the maximum Pell grant could be especially devastating for working parents.

Forcing students to take more credits “doesn't incentivize faster completion,” Thompson said. “It penalizes people whose life circumstances are complicated.”

What’s fair to borrowers and taxpayers?

The Trump administration, however, asserts that it is making moves to make the federal student loan system more fair. At a conference in April, White House press secretary Karoline Leavitt leveled a common refrain: “Why should Americans who didn’t go to college — or went to college and responsibly paid back their loans — pay for the student loans of other Americans?”

The Trump administration, she added, “will never force taxpayers to pay student loan debts that don’t belong to them . . . Borrowers will now be clearly expected to repay their loans, and those who default on their loan obligations will face involuntary collections. The government can and will collect defaulted federal student loan debt by withholding money from borrowers’ tax refunds, federal pensions, and even their wages.”

The college affordability advocates pushed back against this rhetoric.

“The idea that providing relief to someone through public money is somehow harming someone who has paid into taxes like everyone does — it goes against the idea of what living in society is,” Jackson said. “We are all paying taxes in one shape or form, and we are all benefiting from those taxes.”

“I am not a homeowner, but I certainly support any kind of relief programs that are available for [them] if they fall behind [on their mortgage payments],” Canchola Bañez added. “I also support folks benefiting from [food assistance], even if I don't directly benefit from them.”

The House Republicans’ plan “is an incredible blow to decades of progress of strengthening financial aid for students,” Thompson said. “This level of change would severely restrict who is able to go to college, the likes of which we haven't seen in a very long time.”

But that change, she and the other affordability advocates stressed, has not yet taken place.

Thinking about taking out a federal student loan?

MorraLee Keller, a spokesperson for the National College Attainment Network, said students who need help paying for college should complete the Free Application for Federal Student Aid (FAFSA) and make sure to exhaust all grant and scholarship opportunities before contemplating a loan.

Thompson encourages students to explore the Department of Education’s College Scorecard. In addition to a school’s graduation rate and average annual cost, students can find the typical debt for its undergraduates and how much they tend to pay per month for their loans.

Students can get attached to a particular college for a variety of reasons, Thompson said. She encourages them to “do some comparisons, look at different options, and think about how to reduce your costs.”

Resources for paying for college

• LAist: How do I get money for college?
• FAFSA is open to students who are U.S. citizens. Some noncitizens, including permanent residents, are also eligible.
• The California Student Aid Commission continues to host Cash for College workshops, in-person and online.
• NPR: What to know as the government begins collections on defaulted student debt