I’m neither an economist nor an accountant, but I am a pastor with thoughts on loving our neighbors, praying for those who persecute us and taking advantage of vulnerable people. I leave the argument to three people who speak to the issue of student loan forgiveness better than I can:
From Mary Jacob (used with permission), Executive Director of Families Helping Families of Greater New Orleans
My final attempt to help those that don’t understand the student loan game.
Mortgage: At closing, you know exactly what you will pay back. Interest is calculated monthly. Extra payments pay down principal.
My Mortgage was $135k for a 30-year loan in 2004. Refinanced once for lower interest rates and terms. We made a couple of lump sum principal payments and the house was paid off in 2021. That’s 13 years early.
Student Loan: Interest is compounded daily. Extra payments go toward future payments, not to pay down the principal. If you don’t make a monthly payment because you are paid up in advance, your interest is still calculated daily.
I was told if I made my payments on time (I never missed a single payment nor paid late) loan would be paid off in 20 years. I won’t say the college financial aid rep lied to me. What I will say is she probably didn’t understand it herself.
I was also told about the Public Service Forgiveness. Make 10 years of payments and the rest is paid off. Well, when I applied, I was told my loans weren’t eligible.
I borrowed $45,000 in student loans
First 10 years I paid $275/month = $33,000
Next 15 years I paid $550/month = $99,000
1 final lump sum payment = $16,000
Mortgage $135k paid off in 17 years for a total of $183,000.
Student Loan $45k paid off in 25 years after making a final $16k payment for a total of $148,000.
Yes, you can say everyone should know better, but chances are you wouldn’t have known any better either.
We are told over and over that your way out of poverty is through education. Yet, the poorest, most vulnerable, first-generation college students are just happy to be living their dream and trying their hardest to escape the cycle of poverty.
What the government should do is take every penny people have paid toward interest and apply it to the principal and preferably stop charging interest. This would probably pay off many loans. At the most, the loans should be set up like a mortgage.
Anyone who reads this and doesn’t understand the system is broken doesn’t want to understand.
From Leslie Streeter, Columnist for the Baltimore Banner
Black Americans paid taxes during segregation for pools they weren’t allowed to swim in, fountains they couldn’t drink from and buses they had to ride in the back of. So…miss me with this “Why am I paying for school I didn’t go to?” At least this is about uplift, not hate.
Helping those burdened by ever mounting debt is one way to make life, liberty, and the pursuit of happiness possible for those who don’t yet have those “inalienable rights.”