Fintech’s Student Loan Empire in the Age of Trump

As the second Trump administration wages war on the Department of Education, disbands regulatory protections, and openly courts billionaires over borrowers, another machine continues humming in the background—one that rarely makes headlines but stands to profit from the coming deluge of student loan defaults.

Enter Credible, LendKey, Purefy, and Splash Financial—a quartet of fintech firms with shiny websites, soothing interfaces, and predatory precision. Together, they represent a new face of student debt capitalism, where algorithms replace accountability and refinancing replaces relief.

With federal repayment programs in disarray and income-driven repayment options under political attack, these platforms are poised to scoop up disoriented borrowers, offering them lower rates in exchange for their last shred of protection. In this era, fintech isn’t just a workaround to broken federal systems. It’s a weaponized mechanism of privatization, hiding in plain sight.

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Credible: Fox News Meets Finance

Credible, a loan comparison site launched in 2012 and bought by Fox Corporation for $265 million, exemplifies the corporate convergence of media, politics, and predatory finance. Its business model is simple: steer borrowers to private lenders and collect a fee.

What makes Credible especially dangerous now is its backing by Rupert Murdoch’s empire, giving it privileged placement across conservative media. In the Trump era, where truth and financial ethics are negotiable, Credible becomes part of the machinery: a platform peddling student loan refinancing under the banner of “freedom” and “individual responsibility.”

Its prequalified offers may seem consumer-friendly, but the reality is more sinister: borrowers lose access to Public Service Loan Forgiveness (PSLF), income-driven repayment, and federal deferment rights—often without full disclosure. And there’s no federal watchdog left with the teeth to stop it.

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LendKey: Privatization via Local Lending

Once hailed as a democratizing force in student lending, LendKey now serves as the gateway for credit unions and small banks to enter the refinancing market. By providing digital infrastructure and loan servicing, LendKey enables even the smallest financial institution to compete in the debt arms race.

But it’s no populist hero. In a Trumpian economy where regulatory oversight is gutted, LendKey helps funnel borrowers from federal protections into private debt with fewer rights and more risk. Its loans are marketed with community-friendly language, but behind the scenes they’re just another piece in a growing puzzle of financialization.

As the default rate ticks up—and it will, with millions unprepared for repayment—LendKey's partner institutions may face waves of delinquency. But LendKey still profits, regardless of whether its borrowers sink.

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Purefy: Elite Refinancing in an Age of Collapse

Purefy, partnered closely with Pentagon Federal Credit Union (PenFed), continues to focus on white-collar borrowers and high-income households. With its niche offerings—like spousal loan refinancing and Parent PLUS buyouts—Purefy doesn’t hide its demographic targets. It’s a platform for the haves—not the have-nots.

Now, in a Trump-led America where debt relief is dead on arrival, Purefy serves as a lifeboat for select borrowers, mostly those with six-figure incomes and perfect credit. For everyone else, there’s no rescue—just rising interest, frozen wages, and default letters.

What’s worse: Purefy’s slick interface masks its private lending alliances, and borrowers often don’t know whether their servicer is PenFed, ELFI, or someone else entirely. Transparency, once a fintech virtue, has eroded into strategic ambiguity.

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Splash Financial: A Fintech Platform for the 1%

Initially built to refinance medical school debt, Splash Financial has expanded into a broader fintech infrastructure role, helping banks and credit unions deploy private loan products under white-label brands. Recently acquired by Nymbus, Splash is less about helping borrowers and more about selling digital weaponry to lenders.

Its target demographic—doctors, dentists, tech professionals—is largely insulated from the coming crash. But as student loan interest rates climb and defaults spike, Splash stands to gain by filtering the "creditworthy" from the desperate, feeding clean data to lenders while offloading risk onto consumers.

In the new political regime, where borrowers are told to “pay what they owe” and compassion is framed as weakness, Splash’s business model looks less like innovation and more like extraction by design.

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The Coming Storm: Defaults and Deregulation

Federal student loan payments have resumed, but millions are behind or confused. The SAVE plan is under legal attack. Forbearance options are shrinking. Servicers are overwhelmed or deliberately opaque. The Biden-era reforms are being dismantled, and debt relief promises are evaporating under Trump’s budget cuts and executive orders.

This is a perfect storm for fintech lenders. As traditional repayment plans implode, desperate borrowers will turn to refinancing offers—many not realizing that by switching to private loans, they’re permanently shutting the door on cancellation, forgiveness, or manageable repayment plans.

In this new default economy, the winners are not educators or students—but platforms like Credible, Purefy, LendKey, and Splash. They won’t bear the burden of broken promises or economic ruin. They’ll take their cut, rinse, and repeat.

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An Engine of Extraction

This is not innovation. It is not disruption. It is digital debt peonage, dressed in Silicon Valley branding and sold as financial freedom.

In the second Trump administration, student loan fintech is flourishing, not in spite of the chaos—but because of it. These companies are the beneficiaries of policy neglect, privatization, and regulatory retreat. They are the corporate middlemen of misery, accelerating the financial collapse of an entire generation.

If there’s a future reckoning for student debt in America, it won’t begin on a campaign trail or in a press conference. It will begin with the simple question: Who profits when borrowers fail?

More than 200,000 former Walden University students owe more than $9 Billion

The Higher Education Inquirer has recently received a Freedom of Information (FOIA) response regarding student loan debt held by former Liberty University students.  The FOIA was 25-01941-F.  

The Future of Federal Student Loans

The U.S. student loan system, now exceeding $1.7 trillion in debt and affecting over 40 million borrowers, is facing significant challenges. As political pressures rise, the management of student loans could be significantly altered. A combination of potential privatization, the elimination of the U.S. Department of Education (ED), and a new role for the Department of the Treasury raises critical questions about the future of the system.

U.S. Department of Education: Strained Resources and Outsourcing

The U.S. Department of Education (ED) is responsible for managing federal student loan servicing, loan forgiveness programs, and borrower defense to repayment (BDR) claims. However, ED has faced ongoing issues with understaffing and inefficiency, particularly as many functions have been outsourced to contractors. Companies like Maximus (including subsidiaries like AidVantage) manage much of the administrative burden for loan servicing. This has raised concerns about accountability and the impact on borrowers, especially those seeking loan relief.

In recent years, ED has also experienced staff reductions and funding cuts, making it difficult to process claims or maintain high-quality service. The potential for further cuts or even the elimination of the department could exacerbate these problems. If ED’s role is diminished, other entities, such as the Department of the Treasury, could assume responsibility for managing the student loan portfolio, though this would present its own set of challenges.

Potential for Privatization of the Student Loan Portfolio

One of the most discussed options for addressing the student loan crisis is the privatization of the federal student loan portfolio. Under previous administration discussions, including those during President Trump’s tenure, there were talks about selling off parts of the student loan portfolio to private companies. This would be done with the aim of reducing the federal deficit.

In 2019, McKinsey & Company was hired by the Trump administration to analyze the value of the student loan portfolio, considering factors such as default rates and economic conditions. While the report's findings were never made public, the idea of transferring the loans to private companies—such as banks or investment firms—remains a possibility.

The consequences of privatizing federal student loans could be significant. Private companies would likely focus on profitability, which could result in stricter repayment terms or less flexibility for borrowers seeking loan forgiveness or other relief options. This shift may reduce borrower protections, making it harder for students to challenge repayment terms or pursue loan discharges.

The Department of the Treasury and its Potential Role

If the U.S. Department of Education is restructured or eliminated, there is a possibility that the Department of the Treasury could step in to manage some aspects of the student loan portfolio. The Treasury is responsible for the country’s financial systems and debt management, so it could, in theory, handle the federal student loan portfolio from a financial oversight perspective.

However, while the Treasury has experience in financial management, it lacks the specialized knowledge of student loans and borrower protections that the Department of Education currently provides. For example, the Treasury would need to find ways to process complex Borrower Defense to Repayment claims, a responsibility ED currently manages. In 2023, over 750,000 Borrower Defense claims were pending, with thousands of claims related to predatory practices at for-profit colleges such as University of Phoenix, ITT Tech, and Kaplan University (now known as Purdue Global). Additionally, some of these for-profit schools were able to reorganize and continue operating under different names, further complicating the situation.

The Treasury could also contract out loan servicing, but this could increase reliance on profit-driven companies, possibly compromising the interests of borrowers in favor of financial performance.

Borrower Defense Claims and the Impact of For-Profit Schools

A large portion of the Borrower Defense to Repayment claims comes from students who attended for-profit colleges with a history of deceptive practices. These institutions, often referred to as subprime colleges, misled students about job prospects, program outcomes, and accreditation, leaving many with significant student debt but poor employment outcomes.

Data from 2023 revealed that over 750,000 Borrower Defense claims were filed with the Department of Education, many of them against for-profit institutions. The Sweet v. Cardona case showed that more than 200,000 borrowers were expected to receive debt relief after years of waiting. However, the process was slow, with an estimated 16,000 new claims being filed each month, and only 35 ED workers handling these claims. These delays, combined with the uncertainty around the future of ED, leave borrowers vulnerable to prolonged financial hardship. 

Lack of Transparency and Accountability in the System

While the U.S. Department of Education tracks Borrower Defense claims, it does not publish institutional-level data, making it difficult to identify which schools are responsible for the most fraudulent activity. 

In response to this, FOIA requests have been filed by organizations like the National Student Legal Defense Network and the Higher Education Inquirer to obtain detailed information about which institutions are disproportionately affecting borrowers. 

In one such request, the Higher Education Inquirer asked for information regarding claims filed against the University of Phoenix, a school with a significant number of Borrower Defense claims.

The lack of transparency in the system makes it harder for borrowers to make informed decisions about which institutions to attend and limits accountability for schools that have harmed students. If the Treasury or private companies take over management of the loan portfolio, these transparency issues could worsen, as private entities are less likely to prioritize public accountability.

Conclusion

The future of the U.S. student loan system is uncertain, particularly as the Department of Education faces the potential of funding cuts, staff reductions, or even complete dissolution. If ED’s role diminishes or disappears, the Department of the Treasury could take over some functions, but this would raise questions about the fairness and transparency of the system.

The possibility of privatizing the student loan portfolio also looms large, which could shift the focus away from borrower protections and toward financial gain for private companies. For-profit schools, many of which have a history of predatory practices, are responsible for a disproportionate number of Borrower Defense claims, and any move to privatize the loan portfolio could exacerbate the challenges faced by borrowers seeking relief from these institutions.

Ultimately, there is a need for greater transparency and accountability in how the student loan system operates. Whether managed by the Department of Education, the Treasury, or private companies, protecting borrowers and ensuring fairness should remain central to any future reforms. If these issues are not addressed, millions of borrowers will continue to face significant financial hardship.

When Banks Lost Control of the Student Loan Mess

History can be many things. It can be both informative and purposely deceptive. And from time to time, historical events need to be revisited if we seek the truth. We also find critical historical analysis essential when we think about US higher education and student loan debt from a People's perspective.

In a previous article we said Best and Best's classic The Student Loan Mess needed to be updated and reexamined. Although the book was an exceptional chronicle of the student loan industry from 1958 to 2013, it missed at least one key event, the 2008-2010 bailout of Sallie Mae and a number of banks who made questionable private loans guaranteed by the US government. This lesson is especially important if the US government decides to get out of the student loan business or reduce government oversight of student loans.

From 1965 to 2010, the federal government was a backstop for private student loans, Guaranteed Student Loans, also known as the FFEL loans. Annual volume of private loans skyrocketed, from $5B in 2001 to over $20B in 2008, when 14 percent of all undergraduates had one. A secondary market for private student loan debt (student loan asset-backed securities) also began to flourish. An industry group, America's Student Loan Providers (ASLP), provided political cover for private lenders.

In 2007, President George W. Bush signed the College Cost Reduction and Access Act of 2007 (HR 2669) which cut subsidies to lenders and increasing grants to students. But this did little to contain the growing mountain of student loan debt. A mountain of unrecoverable debt that was crushing millions of consumers as the US was facing an enormous economic crisis, the Great Recession.

In rereading The Student Loan Mess, we also discovered that these private entities had not only made questionable loans, some private lenders had also bribed university officials to become preferred lenders. How commonplace this student loan grift was has not been adequately explored.

In 2008, the Bush government began a bailout of these private lenders, the Ensuring Continued Access to Student Loans Act (ECASLA), which amounted to $110B. This event occurred largely without notice. And because a larger Great Recession was happening, the ECASLA never received much media attention.

As part of Health Care and Education Reconciliation Act of 2010, President Obama's takeover of the Guaranteed Student Loan program in 2010, did get attention. Ending the Guaranteed Student Loan program was supposed to save the US government $66B over an 11-year period. This rosy projection never materialized. The FFEL loans acquired by the U.S. Department of Education (ED) during the transition to the Direct Loan program are now part of the Direct Loan portfolio. The U.S. Department of Education (ED) acquired an additional $20.4 billion in face amount of FFEL loans from lenders during the transition from the FFEL program to the Direct Loan program.

The FFEL loans that were not acquired by the U.S. Department of Education (ED) during the transition to the Direct Loan program remained with the original private lenders. These loans continue to be serviced by the private lenders that issued them.

For-profit colleges, the engine for much of this bad debt, did get scrutiny, and from 2010 to 2023, their presence was reduced. But overpriced education and edugrift continued in many forms. And after a short respite from 2020 to 2024, the mountain of bad student loan debt continues to grow.

Related links:

A Report on the Loan Purchase Programs Created by ECASLA

Student Loan Debt Clock

America's Student Loan Providers | C-SPAN.org

Student Loan History (New America)

Maximus AidVantage Contracts with the US Department of Education Publicly Available

The Higher Education Inquirer has received all the current contracts between the US Department of Education and Maximus/AidVantage through a Freedom of Information Act (FOIA) request. Maximus serves millions of student loan debtors and has faced increased scrutiny (and loss of revenues) for not fulfilling their duties on time. 

The FOIA response (23-01436-F) consists of a zip file of 998 pages in 5 separate files. HEI is sharing this information with any news outlet or organization for free, however we would appreciate an acknowledgement of the source. 

We have already reached out to a number of organizations, including the Student Borrower Protection Center, the Debt Collective, the Project on Predatory Lending, the NY Times, ProPublica, and Democracy Now!  We have also posted this article at the r/BorrowerDefense subreddit.