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A Likely Trump Message For Colleges: Diversity Is For Losers

President-elect Donald Trump and Betsy DeVos, his pick for education secretary, pose for photographs at Trump National Golf Club Bedminster clubhouse in Bedminster, N.J., Saturday, Nov. 19, 2016. (Carolyn Kaster/AP)
President-elect Donald Trump and Betsy DeVos, his pick for education secretary, pose for photographs at Trump National Golf Club Bedminster clubhouse in Bedminster, N.J., Saturday, Nov. 19, 2016. (Carolyn Kaster/AP)
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COMMENTARY

President-elect Donald Trump’s choice of Betsy DeVos as education secretary signals that his K-12 policy will honor his promise of school choice. As for his higher education policy, though, we have very little concrete information.

The Trump website broadly suggests that he would work with Congress on reforms to ensure that colleges lower their tuitions in exchange for tax breaks and continued federal funding. In addition, he would make it easier for students to pursue a skill, trade or technical education. Not so bad.

But when one looks closer to analyze how Trump seeks to accomplish these broad goals and what DeVos’ previous affiliations and policy positions might suggest for her priorities in higher education, it does not bode well for low- and middle-income students and their families.

First, we can expect a reduction in regulations and oversight of the for-profit and faith-based institutions. It was no surprise that the stock prices of major for-profit college companies rose after the elections, or that Trump quickly settled three lawsuits related to Trump University. Previous experience suggests that decreased oversight disproportionately harms low-income students, as they make up a very large part of the for-profit enrollments. According to Sara Goldrick-Rab, professor of higher education at Temple University, these students are attracted to for-profit colleges because the traditional systems haven’t worked for them. For-profit colleges have much more powerful marketing and recruiting teams.

But here’s the big diversity killer. Trump hopes to increase colleges’ accountability by establishing a risk-sharing system in which colleges will be on the hook for a share of the loans that students cannot repay. In return, he proposes that the schools and lenders have a say in how much students can borrow. Logically, colleges will react by enrolling students with the lowest risk of default. Because white students as a group have more assets and earning potential, this change will  inevitably make colleges more white, hurting not just socioeconomic but racial diversity.

Trump has also expressed interest in putting banks back in the student loan business. Although President Obama removed banks from making student loans with government guarantees, the banks have inched their way back into the business by offering loans with better terms to top-flight borrowers. Last year, billions in loans was converted from government to bank loans, depriving the government of its best borrowers. This trend will only continue if Trump expects banks to shoulder risk. They will cream the best borrowers, leaving the government with the poorest. Schools inevitably will lose decades of hard-fought diversity.

Campaigning, Trump promised some student debt relief to young voters with his income-based repayment plan, which would forgive college debt after 15 years instead of the current 20. People close to DeVos, however, have expressed doubt that she would sign off on any kind of debt forgiveness.

It will be interesting to see how Madame Secretary deals with the federal Pell Grant program. But we shouldn’t be surprised if she supports it, as school choice supporters are known to see the program as the perfect voucher system.

In terms of reducing tuition, Trump’s plan is unfortunately ill-devised. He proposed that colleges use their endowments to lower their tuition, or else he’d remove their tax-exempt status. However, many colleges do not have enough endowment to begin with, and spending more of it would surely put them in a financially unstable state. In fact, we can imagine that a good number of them would be in danger of going under. At the same time, this plan does nothing to address tuition increases at public universities.

Optimistically, there is probably room for a number of Trump’s ideas — in combination with better ones — to contain the mess that the student loan program has become. A new study from the Government Accountability Office estimates that taxpayers will have to forgive over $100 billion of these loans in coming years. As a nation, we no longer have a viable way to finance higher education. To Trump’s surprise, it may become one of his biggest headaches.

Bob Hildreth, a member of the WBUR Board of Overseers and a key financial contributor to WBUR’s expanded education coverage, is the founder and executive director of Inversant. Learn more at inversant.org.

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