Congressional Budget Study on Student Loans
Will they pass a bill to end Income Repayment?
Income Repayment Plans have allowed students to decrease their monthly payment; but like a Negative Amortization Loan before the Crash of 2008 the balances grow and become heavy. This type of loan was outlawed in 2009 for real estate as when trouble hit, and values decreased borrowers found themselves upside down.
Income repayment plans don't pay off the student loan debt in ten years as was planned,
in fact they often burden the student for twenty or more years.
Graduate student borrowers receive eight percent of the federal subsidy through
income driven repayment plans and the cost to taxpayers is rapidly rising.
Congress estimates we lose seventeen cents on every dollar on income repayment loans due
to longer servicing time and defaults vs thirteen cents through standard fixed rate plans
https://www.cbo.gov/system/files/2020-02/55968-CBO-IDRP.pdf
I have mixed feelings on the whole student loan mess. I view it from my personal
seat having saved a 529 plan, paid for my graduate degree, paid for my children's
undergraduate degrees, and worked three jobs. The money I saved was never enough.
In my youngest son's graduating year 2020 I took on parent loans as everything
costs so much. He wasn't able to get all the Engineering classes in a row (U C system
tends to have less than enough professors for upper division classes). It took an extra year.
I also look at the problem from as a person who graduated with a MFA from a renown,
expensive, private school. I struggled to make a living and came to the realization
I must switch careers in order to support my family.
As a tax payer I feel burdened paying forty percent of my W-2 income to give those who
come after a free graduate education. When my home was upside down I stuck it out and paid the
monthly payment. I don't feel that a graduate degree in Arts, Liberal Arts and Humanities
should be free. It's not that I don't experience the value of poetry, painting, and music -
I am a creative person. I am not certain the academic racket is worth twenty years of
payments and the careers aren't there to support the payoff.
What are we to do?
There are millions of people in America who went to a for profit institution - you know
the ones that advertised on the radio and recruited at High Schools (many
now closed) with the sales pitch that grants and loans would get them a high paying
job. Grants are wonderful. The problem is the school never spelled out what the monthly
payment would be and what the consequences would be of this burden. Also that a degree
from these For Profit schools had no value in the marketplace and cost double or triple what
an accredited university costs ($52000 - $65000 a year for a degree that is good as toilet
paper. See study here : http://www.ntanet.org/NTJ/65/1/ntj-v65n01p153-79-for-profit-higher-education.pdf
Higher education should not be life long pack on your back. I want Congress to allow
individuals to include their Federal student loans in a bankruptcy and wipe them out.
This puts the burden to demonstrate need on the courts and ends the long term pain.
If someone has a heavy weight that keeps them from climbing, this is a good recourse.
What solutions do you have?
