Many expected Donald J. Trump to regain the White House but not many expected such a convincing victory as Trump outperformed his results from 2020 across the country and won the popular vote for the first time. Such an unprecedented return to office, with Republicans regaining control of the Senate and retaining (likely) control of the House, brings forward the prospects of substantial impact on domestic and foreign policies. This is our attempt to outline what a second Trump presidency may entail for Defynance, the economy, employment, taxes, government regulations, and the student loan debt.

The Economy

"America First" will continue to anchor Trump’s economic strategy, emphasising the strengthening of American manufacturing, reducing reliance on foreign supply chains, and incentivising companies to bring production back to the U.S. This approach would likely maintain or expand tariffs, particularly against China, to protect domestic industries and stimulate economic growth. CNN exit polls showed that voters felt Trump is better for the economy by a margin of 79% to 20%.

The Defynance mission is to invest in the American workforce by refinancing student loans. Therefore, if the Trump administration, as promised, focuses on the economy in order to drive job growth and maintain low unemployment, investor risk will be lowered. This would be on top of how carefully Defynance selects refinancing candidates based on our proprietary algorithm and credit assessment criteria.

Taxes and Inflation

Donald Trump has expressed his intent to "cut taxes very substantially." In his previous term, he implemented the Tax Cuts and Jobs Act (TCJA), which lowered the corporate tax rate from 35% to 21% but his aim is to get it down to 15%. The TCJA also reduced the top personal tax rate from 39.6% to 37%. The coming Trump administration is expected to pursue further tax reforms focused on stimulating economic growth and encouraging corporate investments, which is expected to drive up the deficit and potentially fuel inflation to levels between 6% and 9.3% by 2025, which may raise household costs by $2,600 to $7,600 annually.

Such policies could benefit Defynance investors if they stimulate economic growth, keep the unemployment rate low, and increase jobs. The long-term effects could also lead to further inflation but Defynance refinancing customers will be protected with the various consumer protections built into the Defynance income sharing solution. Inflation may also lead to faster income growth, which would be augment investor returns in the Defynance Fund.

Deregulation

Trump is an advocate for deregulation, especially in the financial, energy, and environmental sectors. Additional policies aimed at reducing regulatory oversight are anticipated, with the goal of stimulating business potential and job growth.

This approach should benefit income sharing financing providers like Defynance. The Biden administration put income sharing in the same regulatory bucket as loans, which led to regulatory headwinds but that should change with the upcoming Trump administration. The previous Trump education secretary supported alternative income sharing solutions like Defynance. Additionally, with regulatory headwinds hopefully turning into tailwinds, there may be sufficient momentum to pass currently proposed income sharing financing bi-partisan Congressional bills into law. This would further reduce regulatory risk for investors in the Defynance Fund.

Student Loan Debt  

When President-elect Trump was last in office, there were restrictions on student debt forgiveness, including changes that limited debt relief for students misled by their colleges and universities. Additionally, Public Service Loan Forgiveness (PSLF) saw a high denial rate, with 99% of applicants rejected.

Subsequently, the Biden administration worked to make repayment plans easier to afford, reform PSLF, and delivered student loan forgiveness to nearly 5 million student loan borrowers to the tune of more than $175 billion. However, their plan to blanket forgive $10,000 to $20,000 in student loans for all borrowers was struck down by the Supreme Court.

Now that Trump has been reelected on such a resounding basis, the odds of student debt continuing to grow will increase and improvements made to the student debt system by the Biden administration will be reevaluated or repealed.