The latest on the education front is that Linda McMahon’s Department of Education is to become no more than a glorified collection agency to enforce collection of student loans, despite the borrowers’ ability to pay. You better think twice before labeling all loan recipients who can’t pay as “deadbeats.”
McMahon is quoted as saying, “I am announcing the end of the dishonest and irresponsible policy. We will conform to the department’s repayment options to federal court decisions and end the Biden era practice of zero interest, zero accountability forbearance that are pushing borrowers into loan delinquency and default. On May 5, we will begin the process of moving roughly 1.8 million borrowers into repayment plans and restart collections of loans in default.
Borrowers who don’t make their payments on time will see their credit scores go down, and in some cases their wages automatically garnished. Why? Not because we want to be unkind to student borrowers. Borrowing money and failing to pay it back isn’t a victimless offense. Debt doesn’t go away; it gets transferred to others. If borrowers don’t pay their debts to the government, taxpayers do.”
I am one of those loan recipients, not in default, but struggling to pay the monthly payments, and I offer a different perspective on loan repayment and who is actually responsible for so many students unable to pay for the loans they took out in good faith.
I took out a loan for $89,000 for my son’s bachelor’s degree and my advanced post graduate degree. Payments started in 2004. I believe the President of the United States was George W. Bush, but student loans have been around since 1962, so I don’t think any one president of political party is totally responsible for this student loan debacle.
My loan, unbeknownst to me, was immediately sold to a company called Nelnet, (later Sloan Services) who acts as the administrator of my loan as well as thousands of other loans belonging to unsuspecting students.
I am currently 71 years old and have retired after dedicating 41 years to teaching. I now live on a teacher’s pension and Social Security. To date, the total amount I have paid on the $89,000 loan, according to Nelnet records, is $267,652.68. You would think that after paying for 20+ years, the loan would be paid off. But according to the loan company my balance is still $162,149.33. So, if by some miracle I could come up with the balance tomorrow, I will have paid back $429,802.01 on an $89,000 loan. But I won’t be paying that tomorrow, and the interest will continue to accrue, and the balance will continue to increase, and my credit score will continue to creep lower and lower.
As McMahon mentioned, income-based repayment plans, which I have been on since retirement, provide a low monthly payment but nothing comes off the principle and everything is added to the interest. Interest accrues during forbearance as well, an option I chose for a short while after I was widowed. Trump recently announced that he will be ending the income-based repayment plans so my $400 payment of which I struggle with, will now be over $1,200 a month. Alas, our American government at work creating a student loan abyss—one of which there is no escape.
The hypocrisy over the issue of loan forgiveness is rooted in the way the government has managed the Paycheck Protection Program (PPP) for members of Congress. The PPP gave and forgave loans to 13 Republicans and several Democrats totally in the millions of dollars, but when it comes to student loan forgiveness, Mitch McConnell said Biden’s forgiveness plan was “a slap in the face of working Americans.” The House Judiciary GOP in response to Biden’s loan forgiveness tweeted, “If you take out a loan, you pay it back. Period.” And Representative Jim Jordan of Ohio tweeted “Who will pay the price of Biden’s student loan handout? The 87% of Americans who don’t have student loans!”
I guess it just depends on who you are as to who gets the perks of loan forgiveness.
My call is to every student who has a similar story to mine to band together, speak up, and we must find someone to represent us in a class-action lawsuit against this governmental abuse of power. The government created this monster, and we can only assume that the courts will have to fix it, since Congress is seemingly now emasculated. Maybe an ambitious reporter can take up our cause and blow the lid off this abuse, because I have paid back my loan, many times over, with interest. I am sending copies of this letter to every congressman or congresswoman, as well as to the media.
Ann E. Taylor, PsyD
Oakwood, TX
