Can the Trump administration make college cheaper?

Summary

Planet Money (NPR): "Can the Trump administration make college cheaper?"

Original Air Date: July 1, 2026
Hosts: Kenny Malone & Cory Turner

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Episode Overview

In this episode, Planet Money explores the Trump administration’s new approach to curbing the rising cost of higher education, specifically by placing new caps on the amount students can borrow for graduate school through federal loans. The NPR team unpacks the rationale, historical roots, conflicting research, and the likely real-world impacts on students and universities.

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Key Discussion Points & Insights

1. The New Trump Administration Policy

• Summary:
  As of July 1st, 2026, the U.S. Department of Education introduces loan limits for graduate students (most capped at ~$21,000/year). More expensive programs such as law and medicine receive higher caps.
• Motivation:
  Officials claim unrestricted federal aid encourages colleges to increase tuition (“If there’s a lot of federal student aid floating around, colleges have no incentive to lower their prices.” – Cory Turner, 02:14). By capping loans, the administration hopes to pressure schools to rein in costs.
• Who’s Impacted:
  The biggest change targets graduate students. Undergraduate caps change little, except for limits on the “Parent PLUS" loan (05:40).

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2. Sticker Price vs. Net Price

• Insight:
  • The sticker price (publicly advertised tuition) for college is high and rising.
  • The net price (what students actually pay after aid/scholarships) has been stagnant for undergraduates for about a decade (06:04–06:55).
  • For graduate school, net tuition has sharply increased—the largest portion of federal student loan debt comes from grad students (07:01–07:23).

Notable Quote:

“The net price of undergraduate four year programs has been stagnant for roughly 10 years.”
— Cory Turner, 06:10

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3. Where Did This Idea Come From? The Bennett Hypothesis

• Origin:
  In 1987, Secretary of Education William Bennett (Reagan administration) argued that increases in federal student aid allowed colleges to “blithely raise their tuitions” because aid would cushion the blow for students.
• Catchphrase:
  This became the “Bennett Hypothesis” — expanded loans fuel tuition increases (09:43–10:36).

Notable Quote:

"Have enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase."
— Reading Bennett's 1987 Op-Ed, Cory Turner, 10:01

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4. Does Research Back Up the Bennett Hypothesis? (Conflicting Evidence)

A. Texas Study – Evidence for the Hypothesis

• Research by Jeff Denning, University of Texas at Austin:
  After unlimited grad loans began in 2006, Texas schools that got “easy money” raised tuition.
  • Finding: For every new federal dollar available, schools raised grad tuition by 64 cents (15:19).
  • Study suggests a causal link for Texas grad schools (15:35).

Notable Quote:

"...for every additional dollar that students received overall in loans, graduate schools increase their prices by 64 cents, two thirds of a dollar, something like that."
— Jeff Denning, 15:19

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B. National Study – Evidence Against the Hypothesis

• Research by Robert Kelchen, University of Tennessee:
  Studied business, law, and medical grad programs across the country (16:14).
  • Finding: No evidence of widespread direct link between loan limits and tuition increases, except possibly at for-profit schools (16:45–17:12).
  • Many expensive programs (e.g., medical schools) are inherently high-cost to operate.

Notable Quote:

“I did not find evidence of the Bennett Hypothesis, meaning no evidence that there’s a direct connection between student loans and tuition prices.”
— Robert Kelchen, 16:45

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5. Expected Impact of New Loan Caps

• Preston Cooper (American Enterprise Institute):
  Most grad students already borrow within the new caps; only about 30% will be directly affected (20:59–21:23).

  • The policy mainly pressures the “elite” expensive schools, notably NYU and USC (21:24).
  • Over time, this could encourage students to choose cheaper schools and force high-priced institutions to reconsider their costs (21:50–23:07).

• Short-Term vs. Long-Term Effects:
  Most experts agree:

  • In the short run, only modest reductions in tuition are likely, and only at certain programs (23:07–23:46).
  • Some schools have already announced intended price cuts (23:49).

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6. How Will Students React?

• Possible Student Responses:
  • Students may be forced to seek private loans — but this market is now limited, especially for lower-income, less creditworthy borrowers (25:04, 25:39).
  • Others may decide not to attend grad school at all when faced with funding gaps (24:56–25:06).

Notable Quote:

“The number one thing that happens is that students stop going to college.”
— Dominique Baker, University of Delaware, 25:04

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7. Unintended Consequences & Critiques

• Game of Chicken:
  The administration is pressuring schools by risking students’ futures; the people who want degrees are being “used as the messenger” (27:12–27:32).
• Equity Concerns:
  Lower-income students may be boxed out or forced to take out private debt in less favorable conditions.

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8. Are There Better Ideas?

• Field-Specific Lending:
  Suggestion: Make federal lending limits flexible depending on a program’s actual training costs (28:18).
• Return-on-Investment 'Do No Harm' Rule:
  New policy (“do no harm provision”) will entirely cut off federal loans to programs where grads earn less than high school graduates (28:36–29:12).

Notable Quote:

"If a college program...graduates don't end up earning more than a high school graduate who didn't go to college, that college program is going to lose access to federal loans entirely."
— Cory Turner, 28:36

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Memorable Quotes

• On the paradox of tuition and loans:

  "Is the problem that the money is being given out, or that the money is needed because college is so expensive?"
  — Kenny Malone, 05:04

• On the policy gamble:

  "I feel like the Trump administration is playing chicken with schools."
  — Cory Turner, 27:32

• On severe measures:

  "Would you even call that a cap?"
  "No, I call it a death sentence."
  — Kenny Malone and Cory Turner, 29:12–29:16

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Timestamps for Key Segments

• Intro and Policy Announcement: 00:16–02:14
• Explaining the Logic & Plan: 02:49–05:40
• Discussion on Sticker Price vs Net Price: 06:04–07:23
• The Bennett Hypothesis History: 09:01–10:36
• Texas Study on Unlimited Loans: 14:10–15:35
• Kelchen’s Broader Study: 16:14–17:38
• Expert Expectations on Loan Caps' Impact: 20:53–23:07
• Student Impact and Private Loan Discussion: 24:56–26:24
• Equity and Policy Critique ("Game of Chicken"): 27:12–27:45
• Alternative Solutions & 'Do No Harm' Rule: 28:18–29:16

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Final Thoughts

The Bennett Hypothesis—the idea that federal aid drives up college costs—has some support, especially for certain grad programs, but major limitations and substantial counter-evidence remain. The Trump administration’s new grad loan caps represent a bold, largely untested experiment, likely to hit only a subset of programs and schools, with possible unintended trade-offs that risk access for future students. For now, researchers and policymakers remain cautious: the real effects will play out in the coming years, and many are watching closely.

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To explore related stories, visit NPR.org or listen to Cory Turner on The Indicator.

Transcript

[Commercial Announcer]

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[Kenny Malone]

This is Planet Money from NPR. The Trump administration is taking a new approach to a very sticky problem in the United States, that of student loan debt, all nearly 1 point trillion of it. The Department of Education has a plan to bring down tuition costs beginning today, July 1st. What is that plan? Well, Education Secretary Linda McMahon recently described it to lawmakers at a committee hearing on Capitol Hill. We want to bring down the cost of education. Yeah, so far so good. Following that. Then she describes this big change to the federal program that loans students money for school.

[Cory Turner]

We've put in caps on programs for graduate students and undergraduate students to make sure that we can help reduce the

[Preston Cooper]

cost and the burden of college.

[Kenny Malone]

Yeah, actually hold there for a second because that, that is the confusing bit for me. I believe she said to quote, help reduce the burden of college. The plan is to give less money to student borrowers.

[Cory Turner]

And that's where I, I was really intrigued by their logic.

[Kenny Malone]

This is Cory Turner, covers education for npr. Every time I run into Corey at the like NPR coffee machine, he will tell me something about some new thing happening in education and then months later the thing has exploded into a front page story. And that is why I listened to Corey recently when he told me to go check out Secretary McMahon's tuition fighting plan. So that plan basically is starting July 1st if you want get a graduate degree in most fields. The Department of Education, the biggest lender for student loans is saying that they're only going to give you about $21,000 a year. That is the cap if your tuition costs more than that. Well, sorry, the ed department is not lending extra to cover it.

[Cory Turner]

The administration's logic is based on this sort of old idea and that is that if there's a lot of federal student aid floating around in the higher education marketpl colleges have no incentive to lower their prices. And so if they cap federal student loans specifically for graduate students, then the hope is colleges and universities all over the country will have no choice but to then lower their prices.

[Kenny Malone]

I have many follow up questions.

[Cory Turner]

Yeah, so it sounds logical. The question is, is it actually tr

[Kenny Malone]

hello and welcome to Planet Money. I'm Kenny Malone.

[Cory Turner]

And I'm Cory Turner.

[Kenny Malone]

And Cory, I believe you have now called basically anyone who has had a hand in trying to study whether or not this proposal stands a chance to work.

[Cory Turner]

That's right.

[Kenny Malone]

Today on the show, Corey tells us what he's found and tells us the roots of this. Less money, less tuition problems? Is that what they're calling it?

[Cory Turner]

Lower loans, lower prices? I don't know.

[Kenny Malone]

It might need workshops. Whatever the name of this is, the roots of this particular solution.

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This message comes from Capital One. Capital One offers checking accounts with no fees or minimums. What's in your Wallet, terms apply. SeeCapital1.com BankGuy for details. Capital One NA member, FDIC support for NPR and the following message come from Rippling. These days you can chat with AI about almost any business problem, but rippling AI is designed to actually solve them. That's because rippling AI is built on your live global workforce data. So it doesn't just uncover insights into your business, it uses them to take complex actions across your departments. Ready for AI that isn't all talk. Head to rippling AI, slash money and get AI that turns insight into action. That's R I P P L I N G A money sign up today.

[Kenny Malone]

So we're gonna bring college prices down. That's what we're about to do today.

[Cory Turner]

Yeah, I'm excited. College prices, look out. You're going down.

[Kenny Malone]

Today we have invited NPR's Cory Turner over to our Planet Money House because big things that may affect you, that may affect your kids, your higher ed dreams, they are happening.

[Cory Turner]

There's a consensus that there's a problem with the size of federal student loan debt in America. The question is, how do we fix the problem moving forward?

[Kenny Malone]

Give less money, Give less money out.

[Cory Turner]

That is their proposal. And so I may I ask, before

[Kenny Malone]

we address that, is the problem that the money is being given out or that the money is needed that college is so expensive?

[Cory Turner]

Why would you ask such a Gordian knot of a question?

[Kenny Malone]

I see. Okay. For the rest of the episode, we will try to untie that knot to understand what problem the Trump Department of Education is trying to fix, specifically why they think less money is the right approach and simply will it all work. But first, something we must address, the administration's plan.

[Cory Turner]

The changes going into place today, I mean, they will affect some loans for undergrads through a program that lets parents borrow for their kids. But really what we're talking about here, the huge change is not about undergrad. It's all about grad school.

[Kenny Malone]

And like what? Well, prepare to have your mind blown.

[Cory Turner]

So here's the weird thing. So the cost of undergraduate college is not rising.

[Kenny Malone]

What?

[Cory Turner]

The net price of undergraduate four year programs has been stagnant for roughly 10 years.

[Kenny Malone]

Why? Cory, Then whenever I run like calculations for how much I'm supposed to save for my very young children for college, it's like, oh, you might need millions of dollars. Why are people telling me that?

[Cory Turner]

Well, so there is a chasmic difference between sticker price and net price.

[Kenny Malone]

Ah, got it, got it. Sticker price is what people actually pay.

[Cory Turner]

Exactly. Sticker price has been rising steadily for a long time.

[Kenny Malone]

Okay, send all your emails to Corey. But college net cost has not risen nearly as much as you may think.

[Cory Turner]

Undergraduate college net cost, net net, not sticker net. Has not budged much.

[Kenny Malone]

Corey says schools advertise eye popping tuition rates, but after financial aid and scholarships, the amount that families actually end up paying for undergraduate really has not been changing. That may be different if you're wealthy and you're not getting financial aid, but generally, yeah, grad school is the place where net tuition has really ballooned out of control.

[Cory Turner]

That's exactly right. Whenever people like me talk about the $1.7 trillion federal student loan portfolio, a huge chunk of that is actually grad school debt.

[Commercial Announcer]

Wow.

[Cory Turner]

It's fewer borrowers than undergraduate borrowers. But the debt itself, so much of it is actually graduate school debt.

[Kenny Malone]

Okay, well, let's fix that problem then, shall we?

[Cory Turner]

Here we go.

[Kenny Malone]

All right, so the Trump administration's fix for this problem of ballooning grad school tuition. Their idea of capping how much students can borrow. It's important to understand that it is just the latest move in what's been a decades long back and forth over how much to loan students. So caps on on how much grad students could borrow from the government were first imposed back in the late 60s. Then 20 years ago, in 2006, the Department of Education swung the other way and started offering unlimited loans, which lasted until today. And now the Department of Ed is dismantling that unlimited loan program and we're going back to caps. These new caps are just shy of $21,000 per year for most kinds of grad programs.

[Preston Cooper]

For.

[Kenny Malone]

For more expensive programs like medicine and law school, there is a higher cap. And this idea that caps on student borrowing could actually bring down the cost of tuition, it's been around for a long time. Corey told me at the old coffee machine. I believe that Linda McMahon's Department of Ed, they did not invent this theory, this idea. Where does the story of this idea begin?

[Cory Turner]

Funny you should ask, Kenny. It begins on February 18, 1987.

[Kenny Malone]

I didn't expect a specific date. I will say.

[Cory Turner]

Okay, go on stormy night.

[Kenny Malone]

I'm checking.

[Cory Turner]

No, actually, I don't know what the weather was on February 18, 1987.

[Kenny Malone]

But in what city?

[Cory Turner]

New York. Because here, let me look at it.

[Kenny Malone]

I will say, generally drizzly and hazy in New York City on that day. Yes.

[Commercial Announcer]

Okay.

[Cory Turner]

On that date was published an opinion piece by the New York Times written by Linda McMahon's equivalent, the education Secretary under then President Ronald Reagan. All right, and this opinion.

[Kenny Malone]

Ronald Reagan's Linda McMahon.

[Cory Turner]

Yes, exactly. William Bennett. Bill Bennett. And the opinion piece, the title says it all. He called it Our Greedy Colleges. All right.

[Kenny Malone]

Oh, okay. Do we have this op Ed?

[Cory Turner]

Yeah, we do.

[Kenny Malone]

Okay, let's hear. Let's pull this up and just see.

[Cory Turner]

Okay. Quote, many of our colleges are at it again. They have begun to unveil tuition increases that far outstrip the inflation rate. Next year, tuition is expected to rise 6% to 8%. He argued that increases in federal student aid, quote, have enabled colleges and universities blithely to raise their tuitions, confident that federal loan subsidies would help cushion the increase.

[Kenny Malone]

Okay, we should pause there. So that's. That's the whole argument.

[Cory Turner]

Yeah. And in fact, this idea really took hold, and economists dubbed it the Bennett Hypothesis.

[Kenny Malone]

Okay, now, I will say this does not sound, on its face, preposterous to me.

[Cory Turner]

No, no, I don't think it does either.

[Kenny Malone]

Yeah. So where my brain goes immediately is we cover the Federal Reserve. They are responsible for keeping inflation at around 2%. And when they are worried about prices increasing across the economy, what do they do? Well, they make it harder to borrow money. And so, I don't know, is the DOE, to some degree, not sort of running monetary policy for one product, essentially, which is college? And so if they make it harder to borrow money, would that not be the way to fight inflation?

[Cory Turner]

Well, Kenny, I will leave the monetary policy to you, but I will say it sounds logical. And I think that's why the Bennett Hypothesis persists to this day as a. As a kind of popular idea. The question is, is it actually true?

[Kenny Malone]

Right. When the Bennett Hypothesis was hypothesized, it was exactly that. An untested assumption.

[Cory Turner]

Yeah. There was no real way to test it until 2006, because that's when lawmakers decided to, I mean, really kind of do the opposite of what Bennett was saying. They decided grad students needed more money, you know, not just for tuition, but for things like rent and food and books, a laptop, while they pursued their. So it was exactly 20 years ago today that they enacted the Grad plus loan program. Which was the program that allowed unlimited borrowing for tuition, plus all that other stuff. And that move, even though it was, again, likely the opposite of what Bennett had in mind, it allowed us to test the Bennett hypothesis.

[Kenny Malone]

Right. It provided exactly the kind of data that you would need to study whether easy access to unprecedented amounts of student loans would indeed result in. How did Bennett put it? Yes, quote, colleges and universities blithely raising tuitions to sop up more and more of the money.

[Cory Turner]

Which is why I ended up calling about half a dozen economists and higher education experts.

[Kenny Malone]

Corey had a simple question for all these experts. Is that theory bunk or not? I mean, what do we know for sure at this point about the Bennett hypothesis?

[Cory Turner]

So I pored over these studies by lots of different researchers over the past 20 years about how grad plus affected students. And I'm gonna start with the study that everybody I talked to told me I needed to start with. That is most often cited by Republicans when they say, no, really, this will work.

[Kenny Malone]

Okay.

[Cory Turner]

Research was done in Texas, and it was specifically focused on the creation of the Grad plus program in 2006, where graduate school borrowers suddenly went from having capped loans to essentially being able to borrow as much money to cover tuition and fees as they needed.

[Kenny Malone]

So what was the effect of that easy federal money? Well, Corey got on Zoom and chatted with one of the authors of that study.

[Cory Turner]

His name is Jeff Denning.

[Jeff Denning]

I am an economist and a professor at the University of Texas at Austin.

[Cory Turner]

So what Denning said was they specifically wanted to look at when borrowers were suddenly able to take out a lot more in loans from the federal government. What effect did that have on colleges prices in Texas?

[Jeff Denning]

Did it increase the price that colleges were charging for their graduate programs?

[Kenny Malone]

It's like the perfect natural experiment if you want to test the Bennett hypothesis.

[Cory Turner]

It is the perfect natural experiment. So Denning and his colleagues poured through tons of administrative data from graduate programs all over Texas, and they looked at student level details like enrollment, graduation rates, financial aid. And what they found is really interesting.

[Jeff Denning]

And the short answer is that we found that the price did go up.

[Cory Turner]

Was it. Was it, like, meaningfully up a little bit up? Like, how would you characterize it

[Jeff Denning]

meaningfully up? I would say a meaningful increase in the price.

[Cory Turner]

Denning told me that for every additional dollar that students received overall in loans, graduate schools increase their prices by 64

[Jeff Denning]

cents, 2 thirds of a dollar, something like that.

[Cory Turner]

And Denning and his colleagues say that this is a causal relationship that their study found because the students could borrow More. Many schools were indeed charging more.

[Preston Cooper]

Hmm.

[Kenny Malone]

That's what that study found. So just in Texas.

[Cory Turner]

Just in Texas, but meaningfully meaningful.

[Kenny Malone]

Okay, so great Bennett hypothesis, true. Problem, problem solved.

[Cory Turner]

Not so fast, Kenny.

[Kenny Malone]

Yes, yes, I suspect there's more.

[Cory Turner]

So I also reached out to another researcher that lots of folks told me I need to talk to if I'm digging into the Bennett Hypothesis. And his name is Robert Kelchen.

[Robert Kelchen]

I'm a professor of higher education at the University of Tennessee, Knoxville.

[Cory Turner]

So unlike Denning and his colleagues on the Texas study, Kelchin, rather than studying a state or an area, he focused in specifically on different fields of study.

[Robert Kelchen]

I did research looking at business, medical, and law schools across the country.

[Cory Turner]

So what was the impact of limitless borrowing on traditionally pretty expensive graduate school programs? And what he found?

[Robert Kelchen]

I did not find evidence, quote, I

[Cory Turner]

did not find evidence of the Bennett Hypothesis, meaning no evidence that there's a direct connection between student loans and tuition prices.

[Robert Kelchen]

There's some evidence in favor, particularly at

[Cory Turner]

for profit colleges, but he says it's based on a kind of cynical understanding of graduate school. Basically that the Bennett Hypothesis is a logical conclusion if you're only looking at at certain types of schools.

[Robert Kelchen]

It's a logical conclusion if you think that these graduate programs are massive profit centers. And some programs, fields like business, can be quite profitable, but other fields, for example, medical school, is wildly unprofitable.

[Cory Turner]

And Kelchin's point is there are a lot of graduate fields of study that aren't that profitable because they are so expensive for the schools to offer.

[Robert Kelchen]

It can take a million dollars of resources to produce one medical degree. So limiting borrowing is not going to reduce that cost.

[Cory Turner]

You know, the labs, all of the different services they have to provide to students, and you can imagine the schools are operating on a relatively thin margin.

[Robert Kelchen]

Even if we assume that institutions raised prices when loans became available, it doesn't mean that they have the space to move in the opposite direction.

[Cory Turner]

But part of what Kelchin is saying is the reason these programs are expensive for students is they're expensive for the schools. So it's not so easy for them to cut prices. It's not that they're hugely inflated. I mean, some are, but not all of them.

[Kenny Malone]

So we've got some serious mixed evidence about whether the Bennett Hypothesis could work. Nevertheless, this massive and sudden experiment is going forward today, the day we are publishing this episode. And so the people going to grad school this fall are already scrambling to make it work. We've got more on what the research says about how they're most likely to react after the break.

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[Kenny Malone]

Okay, so mixed conclusions on whether and when the Bennett hypothesis is correct, meaning the evidence linking how much people can borrow to how much grad schools charge for tuition depends on lots of things. But Corey also talked to some other researchers about this new Trump administration plan, which restores the idea of loan caps from 20 years ago. And actually the loans end up being even more limited than before because they don't take 20 years of inflation into account. So, so we asked Corey, like, how do the people you talked to think this move is gonna play out?

[Cory Turner]

So I talked to Preston Cooper at the conservative leaning American Enterprise Institute.

[Preston Cooper]

So I think, you know, going forward, it's important to remember that the new loan limits are still relatively high and that actually most students are already borrowing within the new loan limits.

[Cory Turner]

These new loan caps are probably only going to affect about 30% of grad school borrowers because the vast majority of folks, Cooper says are right now borrowing within the new loan limits.

[Kenny Malone]

Oh, that's interesting.

[Cory Turner]

Yeah. And, and his point is that the point of these new loan caps is basically to put downward tuition pressure on some of the most expensive schools out there, including, by the way, some pretty elite name brand schools. One analysis from the peer center found that the two schools at the top of this list with the most affected borrowers are NYU and usc.

[Preston Cooper]

If students don't go to that absurdly priced university and instead choose a more reasonably priced institution for the same basic degree path. That creates a lot of pressure on the high priced institutions to actually do something to lower their prices.

[Cory Turner]

He's put together some fascinating scatter plots that show say, like a master's in social work and all of the programs in the United States that offer a master's in social work. And you can see he maps where the new loan limits are and the vast majority of programs fall within the limits. But then there are some quite well known and respected schools who for one reason or another are charging two or three times as much for the same degree that you could get at a public university next door.

[Commercial Announcer]

Huh.

[Preston Cooper]

So, yes, I don't want to promise that in the first year where everybody's going to slash their costs and you know, it's going to, it's going to be great. But I do think that this is going to create, you know, some pressure over time, whether that's through students choosing cheaper institutions or through institutions realizing that they can't just raise their the price every year and pass it along to students through the federal loan program. This is going to create some real pressure for cost control in the medium run.

[Cory Turner]

So in the next couple of years, the Bennett hypothesis could maybe lower tuition sometimes at some places. The experts I talked to pretty much agreed on that. Robert Kelchin at the University of Tennessee, he told me he expects to see at most a small decrease in tuition.

[Robert Kelchen]

Students may become a bit more price sensitive, shop institutions a little bit more.

[Cory Turner]

And then Jeff Denning, who was one of the researchers on that Texas study, again, that is most often used by Republicans to justify this move, he told me it's possible we'll see price cuts.

[Jeff Denning]

It's not out of the realm of possibilities that prices would reduce.

[Cory Turner]

And a handful of schools have already said in response to this new program they're going to lower their prices because they know students can't borrow as much.

[Jeff Denning]

There will be less federal aid available. But the question is how will the private market respond? How will students respond? You know, I don't have a crystal ball. I wish I did.

[Kenny Malone]

So no one has a true crystal ball as to how much, if at all, these caps will bring down the price of grad school. But Corey, how do we think students will respond to this? Do we know that?

[Cory Turner]

So, Kenny, one of the folks I talked to is another friend of the

[Kenny Malone]

show, friend of my beat, a regular Cory Turner contributor.

[Cory Turner]

A regular Cory Turner contributor. Her name is Dominique Baker. She's an associate professor of education and public policy at the University of Delaware. And she told me that there's really robust evidence around what happens when you cut financial aid for students. And she said one of the things that most often happens is people just stop enrolling when you cap financial aid

[Preston Cooper]

like a student loan, but don't provide some commensurate type of grant or scholarship to help. The number one thing that happens is

[Cory Turner]

that students stop going to college.

[Preston Cooper]

And that is consistent across the research literature.

[Cory Turner]

And Baker says, though we're not sure that's likely going to be true for grad students too. They're either going to leave school or turn to a private lender to try to get a loan. And Robert Kelchin was also telling me students are scrambling right now to figure out how to pay for school this year.

[Robert Kelchen]

Can they find money of their own? Can they go to the private market and find a loan? Universities are trying to figure out how many students are willing to attend if they have to find money from a source other than the federal government.

[Cory Turner]

So you've got lower income borrowers. What are they going to do? I mean, you could say, well, they'll go to the private student loan market, but the private student loan market is not what it used to be. And that's because it used to be a key source of borrowing for students. Lots of people leaned on it. But when federal grad loans became unlimited 20 years ago, there was this mass exodus out of private loans into the federal system. So there was little reason for students to take take out private loans. And so the private industry shrank. And now it could be way harder to get a private loan. If you're a lower income borrower with, you know, let's just say a short credit history or maybe a suboptimal credit history, you might not be able to get a private loan.

[Kenny Malone]

Well, let me, if I put my sort of ruthless economic theory hat on

[Commercial Announcer]

here,

[Kenny Malone]

that is what it looks like when demand for a product drops, right? It's fewer people enrolling means fewer people are asking for a college degree, or in this case, a graduate degree. And in theory, is that not the signal that is meant to be sent to these grad programs? You're too expensive. People are not going to enroll.

[Cory Turner]

Yeah, I think there's some truth to that, Kenny. And I also think that's not a bad message to send to some of these schools. I, I think it's reasonable to tell those schools we're going to make this money harder to come by for borrowers because we don't think you're giving them a Good return on their investment.

[Kenny Malone]

Right.

[Cory Turner]

And since they're borrowing taxpayer dollars, you know, the message to these schools is we're done. We're not going to lend unlimited money.

[Kenny Malone]

I guess the cruel thing about this particular message to send is that you must use people who want a degree as the messenger. Not that I have a better way to send the message.

[Cory Turner]

Well, I don't.

[Narrator/Reporter]

Yeah.

[Cory Turner]

I don't know if this metaphor is apt. But the way I, my brain keeps thinking of it is as a game of chicken. I feel like the Trump administration is playing chicken with schools.

[Kenny Malone]

The game of chicken is the administration saying, get your prices down or else. We're not going to use taxpayer backed loans to send people to your program.

[Cory Turner]

Get your prices down or we're going to make it so that you have a hard time filling your enrollment. And the trick there is that it's really the borrowers who are the ones having to make those hard choices.

[Kenny Malone]

Does anybody have a better idea for how to get grad school costs down?

[Robert Kelchen]

No.

[Cory Turner]

Yeah, I mean, well, one proposal I've heard from folks is like, make the lending program more supple. You know, lend borrowers what is appropriate for their field of study.

[Kenny Malone]

Okay.

[Cory Turner]

And one of the things the department is also doing, which Republicans created in their one big beautiful bill, is they're implementing a brand new, what's called a do no harm provision, where all college programs are going to be evaluated on the return on investment to their borrowers. So, like, if a college program, if its graduates don't end up earning more than a high school graduate who didn't go to college, that college program is going to lose access to federal loans entirely.

[Kenny Malone]

Entirely.

[Cory Turner]

Entirely.

[Kenny Malone]

So just, I don't know, would you even call that a cap?

[Cory Turner]

No, I call it a death sentence.

[Kenny Malone]

Right, right. Well, I suppose some might say that that is a pretty severe incentive to make sure there's a return on your degree.

[Cory Turner]

Yeah.

[Kenny Malone]

All right, Cory Turner, thank you very much.

[Cory Turner]

Kenny Malone, I appreciate you asking me on.

[Kenny Malone]

By the way, there are a bunch of student loan changes happening today, July 1st. It's not just this big giant one. Corey has a big digital story on the NPR website with a choose your own adventure component. So I recommend playing it through multiple times. Choose all of the adventures. Corey is also over on our sibling podcast, the Indicator, talking about all of those changes.

[Cory Turner]

And. But while you're at it, help us put the planet in Planet Money summer school. Please give us a tip of some economic success from somewhere outside the USA that the rest of the world should know. About. Maybe it's a different way to do home loans or a story about job creation that actually worked. Email [e-mail] and put Summer school in the subject line. This episode was produced by Willa Rubin and edited by Marianne McCune. You it was fact checked by Charlotte Isidore and engineered by Robert Rodriguez. Alex Goldmark is our executive producer. Special hat tip to friend of the show, Corinne I'm Cory Turner.

[Kenny Malone]

I'm Kenny malone. This is NPR.

[Cory Turner]

Thanks for listening.

[Kenny Malone]

You know, every day on Up First, NPR's Golden Globe nominated morning news podcast. We bring you three essential stories. the heart of each story are questions what really happened? What really mattered? What happens next? At npr, we stand for your right to be curious and to follow the facts. Follow up first wherever you get your podcasts and start your day knowing what matters and why.

[Cory Turner]

The fatal shooting of a teenager at

[Narrator/Reporter]

a protest in Seattle has gone unsolved for six years.

[Kenny Malone]

This is open in your face. How are there no answers?

[Narrator/Reporter]

Our investigation has uncovered new evidence and witnesses who say they've never talked to police.

[Kenny Malone]

Did police ever call you?

[Cory Turner]

Not once.

[Narrator/Reporter]

Listen to We Keep Us Safe, a new true crime series on the embedded podcast from N.