In response to the recent story “More federal student loan forgiveness,” which notes that President Joe Biden outlined a new round of federal student loan forgiveness to address the “unsustainable debt” that students/borrowers accumulate to complete their education:
This invented fantasy that there’s an albatross around the neck of every borrower and that they cannot afford (nor should be required) to pay back legitimate loans is absolute nonsense.
Loan payments, for the most part, are recalculated yearly at no more than 10 percent of disposable income. And furthermore, after making regular minimum payments for 10, 20 or 25 years, the balance of loans are written off. So how is this “unsustainable”?
Most student loans are not paid off because interest accumulates as the students make minimum payments, which for many don’t cover principal. This helps explain the current $1.76 trillion deficit from student loans. If Mr. Biden or any other politician truly wanted to help students, they would retroactively lower those rates, which are currently between 3.1 percent and 8.3 percent, to 1 percent or 2 percent to cover the cost of servicing the loans.
This would also increase payback of loans because students wouldn’t be overwhelmed by interest during the life of the loan and would be paying principal as well as interest. This plan should garner bipartisan approval as both taxpayers and students benefit.
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