President Trump’s new Secretary of Education, Betsy DeVos, has recently outlined her plan to solve our country’s educational issues which range from student choice problems to ballooning student loan debts. If DeVos’ plan is adopted across the board, it will drastically change what the future of our country’s education system looks like. But does her plan truly solve our country’s complex educational problems? Let’s use our financial fluency tools to take a closer look.


The Growing Student Debt Crisis


The most pressing issue facing the United States’ education system is the growing student debt crisis. Currently, graduates owe more than $1.4 trillion in student loans spread out over 44 million borrowers. While this number sounds frightening, the severity of the problem becomes even clearer when examining each student loan default rates.


Analysis has shown that nearly 40% of students with loan debts will default on their loans in the next 5 years. With increasing unemployment for students just graduating college, the growing student debt crisis can prove detrimental to their futures as they are bombarded with debt and unable to secure a stable job to pay it off.




While the student debt crisis negatively impacts many, it is disproportionately disadvantaging black students. On average, black students owe more than $43,000 more than white students after 12 years post-graduation due to higher levels of borrowing and lower levels of salary to pay it back.


The extreme disparity between the amount of white and black student debt has led to default rates for black students being severely higher. While the default rate for white graduates hovers around 20%, the default rate for their black counterparts is 49%, significantly higher than even the 38% default rate for white college dropouts.


The growing difference in student loan debts between races is not getting any better. Only 25% of black students entering college in 1996 defaulted, whereas in the past decade this number has skyrocketed to nearly half of all borrowers.


Many of our past political leaders have attempted to solve this issue with plans such as Bush’s No Child Left Behind and Obama’s Every Student Succeeds, and DeVos is no different. She wants to help those less fortunate progress more successfully through the education system of our country. But with extreme budget cuts and massive alterations to our current student loan debt repayment program, the jury is out on whether her plan will solve this problem or simply make it worse.


The DeVos Plan


While many previous political leaders have attempted to curb the growing student debt crisis by pouring more money and resources into programs to subsidize student loans, DeVos is straying from this idea. Instead, she is slashing budgets and returning power to the states by allowing the free market to provide education funded by taxpayer money.


DeVos proposed budget is projected to cut $3.6 billion in the Department of Education’s budget while slashing over $11 billion total in public education. The plan will eliminate programs designed to provide after-school activities for areas composed of mainly minority groups and also training programs for teachers. Some are concerned that putting less emphasis on educating our teachers is hardly the best way to better educate our children.


One of the previous action plans to lessen the burden of loan debts on students was to offer loan subsidies to individuals currently in school. Subsidized loans are a form of debt in which the government pays the loan interest rather than the borrower while the individual is still in school.


DeVos budget plan reduces the subsidized loan budget by $8 billion, effectively eliminating the program.


Instead, they are focusing on loans that accrue interest. The Congressional Budget Office estimates that the budget cuts in loan subsidies will save the country roughly $26.8 billion in the next 10 years. In an attempt to lower the country’s deficit, Trump and DeVos are increasing the burden on our country’s financially weakest group: students. Although DeVos has preached the importance of increasing the quality of education for our future generations, her massive budget cuts are hurting graduates and their student debt issues more than ever before.



In addition to helping students pay off their loan debts, DeVos has also publicly stated her desire to help those less fortunate, specifically minority groups, in gaining a quality education. However, her plan differs from her words once again. DeVos budget plan cuts $3.9 billion from the Pell Grant program, which was designed specifically to help students from low-income families pay for college.


She also projects to eliminate a $40 million scholarship fund used to help DC residents pay for college since they have no option of in-state universities with cheaper tuition prices.


DeVos’ budget cuts demonstrates a conservative ideology of putting more power in the individual’s hands rather than the government’s. However, many of her budget cuts seem to be placing more pressure on the individual as opposed to empowering them. Despite DeVos’ expressed concern for disadvantaged students, major aspects of her plan cut programs specifically designed to help those students.


When it comes to easing the process of servicing student loans, again contrast exists between DeVos’ public statements and her plan of action. Obama made strides in this area when he consolidated the industry of student loan servicers by moving most of the money from private banks to the government.


However, DeVos wants to overhaul this plan by offering the student loan service contract exclusively to one company. She claims that the current plan allows for problems with repayment options, errors upon recording, and long customer service lines.


It’s estimated that the plan would save taxpayers roughly $130 million in the next 5 years while streamlining and standardizing how students deal with repaying their loans. We should be allotting that money to teaching students the importance of financial fluency!


Many critics point out that monopolizing the loan service industry would allow the single company to lack in the exact areas where DeVos thinks it will help: streamlining the process for students. Once an industry is monopolized, the monopolist is able to yield higher profits at the expense of the consumer. And with only one company answering phone calls, its unlikely customer service will improve drastically. We have all waited the seemingly hour-long period to talk with customer service representatives of our phone companies and banks. Now imagine if everyone used the same phone company. Or the same bank. That hour-long wait would turn into a week-long job.


DeVos is using educational programs as a front for cutting more taxpayer money in order to fit Trump’s budget plans. Made clear by her proposed budget cuts to loan subsidy programs, she is once again putting the financial weight of our country on a financially fragile demographic: students.


School Choice


While DeVos has formulated much of her plan around budget cuts, her Republican ideology can also be seen in her push to allow the free market to provide education with taxpayer money rather than public schools. She is pushing for a ‘school choice’ initiative that she believes will allow students and their parents to find the best education that suits their needs.


The budget empowers parents, especially of our disadvantaged youth, to choose the very best school for their children.” – President Trump in his budget summary announcement.


DeVos may be cutting billions from departments across the public education system, but when it comes to her school choice program, the money’s there. She plans to spend more than $1 billion of public money to expand school choice. Rather than invest more into our underfunded public schools, DeVos wants to spend public money on education vouchers and sending more kids from low-income neighborhoods to charter schools.


Based on 2012 data, the cost of public education for one student per year is $10,615. Education vouchers allow parents to use that same amount of money to send their child to a private school. If parents want to steer their child towards a religious school or program designed for a specific type of education, such as engineering or theater, parents are able to do so with less financial burden. However, many critics point out that vouchers take money away from public schools and use valuable taxpayer money to fund private education.


Similarly, charter schools are schools run by private entities but are publicly funded. They can govern their own rules and are usually allowed to deviate from most state guidelines. Many critics are against charter schools for the same reason they are against education vouchers: charter schools take public taxpayer funds away from public education.


DeVos argues that improving access to education vouchers and charter schools allows for disadvantaged children to get access to higher education. However, according to a recent UCLA study, charter school students are actually more segregated than local non-charter schools. The study found that 70% of black charter school students attend charter schools with 90% or more of the student body from minority populations.


The Brown Parallel


DeVos is not the first person to push for a radical education initiative. The current democratic governor of California, Jerry Brown, has attempted to shift funds towards low-income areas in an attempt to improve the access to quality education for the disadvantaged. Over the past 4 years, Brown has moved $41 billion to lower-income areas of California, which amounts to the greatest reallocation of public state funds since LBJ was president. School spending has increased by 29% in Los Angeles alone, however, money being sent to wealthy neighborhoods has largely been unchanged since Brown took office. Brown has attempted to fill the backpacks of California’s poorest with the newest and most effective resources to gaining the best education, however, the reality of the situation has not played out as well as it sounds.


Although in theory Brown’s ideas of pumping money to lower-income families sounds helpful, in reality, it has not helped enough. Many critics of his plan point out that most of the funds do not necessarily reach the people who need it the most. They claim it acts more as a ‘dump truck’ than a backpack by simply dumping money onto school boards without following through and understanding who benefits from the added funds.


DeVos has copied much of her school choice initiative off Brown’s ideals, however, she aims to improve on the flaws of his programs. She is forcing educators to send the money directly to the poorest achievers rather than the overall school boards. While it may take away a large amount of funding from the public school system, DeVos’ plan forces a detailed study of who sees the additional funds from her initiative, and investigates whether the funds are truly benefiting the schools and students who receive them.


DeVos has faced many critics concerning her school choice initiative. While many agree with helping the impoverished gain access to higher education, her critics believe that she is simply using taxpayer money to move public funds to charter and religious schools, which is not helped by her staunch public support of Christianity. Her plan has an eerily similar framework to that of Democratic California Governor Jerry Brown, and many have already been critical of his seemingly flawed approach to fixing education in low-income areas. Only time will tell whether DeVos will be able to fix the shortfalls that plagued Brown’s plan, or if her plan to revamp the public education system will fall flat as well. Only time will tell.


Will it Work?


DeVos has made many public statements regarding her education plan, proposed massive budget cuts, and overall spending changes. However, the disparity between her words and her actions has continued to increase as the effects of her actions are seemingly in direct contrast to her public goals.


She has pushed for helping the student loan debt crisis while providing better education for low-income families and minority groups. However, many of her proposals such as cutting loan subsidiaries, pulling back public education budgets, and pushing for increased student choice, have proven to do the exact opposite of what she intends.


DeVos has stuck firmly to the Republican ideology of cutting budgets and redistributing funds for public education into private hands. DeVos has put all her cards into plans that have proven to have failed in the past, such as her school choice initiative, yet she continues to assure us they will drastically improve the American education system.


Will her plan succeed despite real-life examples of its proven failure? Or will the Republican ideals effectively revamp our nation’s public education system setting up our future generations for even greater success? Based on past examples, the former seems more realistic. By surrounding yourself with a greater understanding of the markets, you can continue to step closer to financial fluency.


Investing in students is one of the wisest investments any nation can make.  Hence, understanding how the Department of Education invests taxpayer money is critical to us all investing smarter, together.