WGNAs the country’s student loan balance hovers around $ 1.7 trillion, the hardship seems never to end.
One in four Americans is in debt on a college loan. While many of them work to pay off the loans, most are still financially underwater, even decades later. Laura Allen, of Chicago, is one of many who still has college accounts as she gets closer to retirement.
The married mother of three, graduated in 1992, received her degree from National Louis University. But that achievement came with a $ 12,000 loan that has risen to over $ 30,000.
Allen is now almost 60 years old.
“I added up my payments one day, and I almost wanted to cry because I paid back over $ 12,000 on my student loans,” Allen said.
Procrastination and patience played out, but she said she always paid the minimum. Still, she still couldn’t get out of her student loan. Allen says she feels angry, hopeless and frustrated.
“I can’t possibly be alone in this situation, and I know even a loan shark would negotiate,” she said.
Personal finance expert Terry Savage says the sad reality is student loans won’t negotiate.
“Student loans are the cockroach’s financial motel,” she said. “You get in and you’re stuck.”
Her idea of eradicating the problem is simple.
“Lower the rate to about what the government pays, 1%, and then let people pay only the principal,” she said. “Many people like Laura have already paid off the principal. That’s the fair way. Remove the excess usurious interest. Have people pay back the original loans. “
In 2020, then-Democratic presidential candidate Joe Biden, if elected, pledged to help students with financial difficulties by forgiving $ 10,000 in loans. Now Senate Majority Leader Chuck Schumer and Democratic Senator Elizabeth Warren want student loan burdens reduced by $ 50,000.
While Biden feels the pressure, Savage believes Congress should formulate a better solution, considering those who have paid off their loan over the years.
“So unfair to people who have already paid off their loans, made a big dent in them, or the parents who have been saving and cutting back,” Savage said.
For things like Allen, a few years after retirement, Savage says the government has other plans for someone’s Social Security.
“If you don’t pay back your student loans by the time it’s time to collect your Social Security, they will, yes, decorate your Social Security benefits,” she said. “In fact, it has already happened to over 115,000 retirees.”
That’s Allen’s greatest fear.
“We can’t destroy people’s entire lives when they retire after paying back the principal on their loan,” Savage said. “It’s time to adjust.”
The philosophy applies to older students, as well as to parents and grandparents who have helped their children and grandchildren with student loans. Before the pandemic, in the second quarter of 2019, just over half, 56%, of the federal student loan’s outstanding debt was actively repaid. Everyone was either in default or on some sort of watch or tolerance.
A further breakdown concludes that women own two-thirds of all student loan debt in the US. In addition, 20 years into the study, the median black borrower owes 95% of their student debt, compared to just 6% for the average white borrower.
Despite the financial crisis, Allen is counting on Congress to give her a lifeline.
“I hope I can get something done with Congress because I just can’t pay back $ 30,000,” she said. “I just can not.”
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