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Student Loan Forgiveness

September 4th, 2022 at 03:42 pm

After President Biden's announcement about student loan forgiveness my former college roommate posted on Facebook about her situation. I graduated from college back in 2000, I think she took a year or two longer to finish. She still has over $25k in student loans. I was shocked. I know that she came from a single parent home & they didn't have a lot of money, but I was surprised as I thought our college was pretty reasonable to attend back then. She said that she has paid more that she initially took out & then some. She has deferred when she was unable to pay.

I am very sympathetic for those that continue to be bogged down with student loan even though I was able to pay mine off. I had only $5k for my undergrad due to having scholarships, then $20k for grad school. I got some repayment funds from the federal governmentfor my grad school loans. I think something like $4k in exchange for committing to continue my employment for a few years. I had every intention of retiring from the VA & still do so it was a no brainer to commit at the time.

Back to my friend, her loans were largely from undergrad though she attended and didn't finish grad school. Her undergrad degree was in education, but she was never able to teach because she couldn't pass the exam. With the teaching shortage I think she would be able to get a job now, but I'm not sure she is interested after all these years. She is hoping, and I as well, that she'll get the $10k loan forgiveness.

Posted in General musings, Education | 5 Comments »

5 Responses to “Student Loan Forgiveness”

  1. rob62521 Says:
    September 4th, 2022 at 06:20 pm 1662315653
    1662315653

    So many of the people I know who took out student loans, borrowed money for more than just schooling. They used it for other things. One gal I worked with admitted she used it for every day spending as well, borrowing more than she needed so she could party and buy things like new clothes and shoes, etc. Then she didn't start paying on it and deferred it and was a shocked when her payments were so much.

  2. Lots of ideas Says:
    September 4th, 2022 at 07:23 pm 1662319392
    1662319392

    My response is mostly a reply to Rob.

    The issue with student loans is that because they were often taken out by people who came from poor families, the student had no one to guide them who had financial experience.

    Income based payment, where you paid less than the interest owed each month meant that even though you were paying 10% of your income, your balance increased each month. The 2008 recession and stagnant wages due to low inflation kept salaries low for many people. Even when interest rates were Los, student loans were still at 6-8%.

    And no physical statements were sent, so people didn’t even know their balances were going up.

    I never understood this until Amber explained what happened to her.

    I see the loan forgiveness as making amends for predatory lending practices.
    The new program won’t increase loan balances each month, and if increased Pell grants pass, students should need to borrow less.

    Many people made bad decisions when they were young. This will give them a second chance.


  3. terri77 Says:
    September 4th, 2022 at 08:33 pm 1662323623
    1662323623

    I've heard both sides of the coins on why people end up in student loan debt. Some took out just enough and lived frugally, others really lived it up. There's no way to ascertain who did what on a case by case basis. I do feel that for the most part people tried to be responsible. But honestly, I know so many adults that don't handle their money well, well into their senior years. There are not many teenagers who have the where with all to fully understand the consequences of borrowing these amounts. We definitely need to think about better financial education in our schools.

  4. Amber Says:
    September 5th, 2022 at 06:02 pm 1662400968
    1662400968

    Student loans have been a nightmare for me. I took them in 2013 for grad school. Because my income was low, up until last year, I did the income driven payments, and like your friend, though making regular payments my loan doubled. Thankfully I landed a few contracts last year and was able to knock almost half out.

    I think we are responsible for paying what we borrow with interest however I think it’s disgusting that one can pay 10+ years and not see the loan decrease.

    Like your friend, I’m hoping to have my loan remaining balance forgiven but in the meantime, I’m still making payments.

  5. LuckyRobin Says:
    September 5th, 2022 at 11:29 pm 1662420594
    1662420594

    I wish that student loans were set up in such a way that you could draw from them only to pay the school directly, like a debit card that would only work for tuition, the campus bookstore for books only, the cafeteria, the dorm costs if you were staying in a dorm, or rent (including utilities) if you were staying off campus, and maybe a set amount of gas each month. You could not use it for anything else. That would save these teenagers a lot of grief. They could get a part time job for incidentals or ask their parents. And high schools should have to teach a required economics class junior year that covers these loans in detail as well as credit cards, debit cards, mortgages, checks (some places still charge you a fee for cards), money orders, bank checks, car loans, how to rent an apartment, how to establish a credit score, how to set up and pay utility bills, how to go grocery shopping, how to use coupons, you know, how to exist as an adult.

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