“As federal student loan payments restart in October, CNN spoke to a lawyer, a doctor, and a scientist about their debt, and how it's impacted their lives.“ https://www.cnn.com/videos/us/2023/10/02/student-loan-debt-repayment-stories-contd-no-orig.cnn
Ouch, I've posted a few of these type of stories before, I mentioned that this is like purchasing a house... People should be held accountable for their purchase and whatever interest is accrued. Having said that, I side on the student end up to a point... If government wants to help, helping with a small fraction of the owed money won't do, but I wouldn't want to fork out some of my own money to help so many others who fall into this debt. A possible solution is to 'reset' the amount to just the borrowed amount and lower the interest rate until they pay it off, instead of cancelling their entire debt.
Yes. 1% might help? Do that for new student loan borrowers too. Other things: 0% interest, and/or allowing to pay down the loan principle while you are getting your degree, and/or a 1% interest starts AFTER you graduate.
No, it isn't. A house deal makes sense. A student loan is "a mortgage -- but where is my house." Line from a financially-strapped grad in a story I wrote, years ago. For a house deal, you need an appropriate income, strictly measured, proven ability to repay, a decent record - and the house has to be worth what you're paying (or somewhere near.). What do you need for a student loan? A student number. Nowhere else in the lending world can so many people borrow so much money, without regard to their ability to repay. As a consumer credit guy for 30 years - I can tell you - this system is broken. It can't be fixed. Start anew from the ground up. Make it make sense. People are getting six-figure loans who couldn't qualify for an old used car. That's not lending - it's nuts.
Remember the "sub-prime" crisis - the "ninja" mortgage loans (early to mid 2000s) that precipitated a financial crisis in 2008? (No income, no job). That's what's happening here - except there are no houses as security.
I'm 100% with Johann here. Moreover, I say stop issuing new federal loans altogether and stop charging interest on existing ones (or at least interest greater than CPI).
Remember when student loans were the last resort? Financial Aid would tell students that. Then you could pay them off in approximately 20 years. What changed? Then President Ronald Reagan decreased the BEOG, renamed it to the Pell Grant, shifted free money for school to the military, IF you signed up for military service you could get $30,000, and either he or former President GHW Bush made it EASIER for banks to loan money for colleges. After that affordable tuition shot through the roof. My humble opinion.
