This sounds like a Republican talking point when I hear it, little different than Reagan talking about “welfare queens” back in the 1980s. Seriously, stop and think about how it actually sounds and how corrosive it is to any discussion that we try to have. Calling it “free money” makes it sound like student loan holders are getting an injection of free money to use as they see fit, which is far from the case. So let’s not use this, or other Republican talking points, ok? We have enough problems on our plate without letting Republicans define how we talk about things.
Here’s some facts on the issue of student loans that I’d like to share to help illuminate the actual issues surrounding student loans.
- There’s a difference between undergraduate loans and graduate loans. Undergraduate loans are those used to pay for associate’s and bachelor’s degrees, while graduate loans are used to pay for master’s and doctorate degrees. The latter are usually much more expensive as well because of the much higher cost of those programs. Most students of higher education had to take out undergraduate loans; most of them did not have to take out graduate loans. When I talk about student loan forgiveness, I am talking about forgiving undergraduate loans, which will benefit most if not all student borrowers, not graduate loans.
- Once you have student loan debt, you can’t get rid of it. Mortgages, credit card debt, car loans, even personal loans, all of those can be discharged through bankruptcy if you truly can’t pay. This is not true of student loans; once you have them, you’re stuck with them until you pay them off or until you die. Which sounds well and good, except…
- Student loans do not factor in a borrower’s actual ability to pay them back. I know because I’ve had a couple of car loans; the bank made very sure that I actually had the ability to pay them off before they approved the loan. This doesn’t happen with student loans for the simple reason that students are rarely earning a wage while they go to school. Combine those two and you find that…
- Many student borrowers find they cannot get employment that would allow them to pay off their loans in a timely manner. When I graduated from college back in the aughties, I was immediately offered a full-time position with another college I had been working at part time. My starting wage was $9.13 per hour, or about $19,000 gross annual. My total loans by that point, for a two year (unaccredited) degree and a four year degree, were nearly $50,000, and the payment for a standard ten year plan was over $500 a month. For comparison, that was as much as I was paying in rent, and nearly half of my monthly income. I simply could not make those payments, so I took an economic hardship deferment and then when that ran out, started doing forbearances. Finally someone told me about income-based plans, but…
- Income-based repayment plans are not large enough to pay off the interest. Many people on income-based plans have monthly payments of $0 because their income is too low. But even if they make enough income to be able to make payments, there’s no way those payments could cover the interest, even on a low-interest consolidation. And as we all know…
- Unpaid interest is capitalized. People on income-based plans quickly find that the debt just keeps getting bigger, because unpaid interest gets capitalized and becomes part of the principle. Which means that future interest is charged based on that, which also goes unpaid, which means it also gets capitalized… It snowballs pretty quickly.
Look, $10,000 in forgiveness is a good thing. There’s no doubt that it will help me out as it will mostly wipe out my accumulated interest over the past decade-plus. And for people who are around that $10k mark, it’ll be a great thing. Not so much for people who owe much more than me, where the $10,000 won’t even come close to the accumulated, capitalized interest.
For me, I’ll basically end up back at square one, except that much older than I was when I graduated. It’s hard to be particularly happy about that given that I’m still not in an actual position to go onto the standard plan. In a couple years I might be able to, but that means a couple more years of unpaid interest getting capitalized in the meantime.
$10,000 forgiveness helps, but remember that I, and people in my shoes or worse, are looking at the way things are likely to trend this election as well. If the Democrats lose, the likelihood of additional forgiveness is likely to go away entirely — assuming the Republicans don’t just retroactively rescind that forgiveness a couple years down the line.
We’re not going to stop fighting, but morale is a very real thing. People who have low morale — which pretty much describes most people with the student loan monkey on their backs — are going to have trouble even noticing opportunities that they could take to help turn that tide and put Democrats in the position where they can properly fix that problem.
And to go back to the subject of my article, Republican talking points are going to hurt our morale even more than it already is. Being told that we’re entitled, or selfish, or whiny, or spoiled, for not being properly grateful for “free cash”, is like rubbing salt into the gaping sores we’ve been suffering from that monkey on our backs. It hurts, very badly, and sometimes that pain just overwhelms our reason.
So please, listen to us. We’re open to listening to you and discussing this in a sensible manner. We’re definitely open to helping make sure the problems that trapped us are properly solved so future generations don’t have to suffer as we did. We can solve this together, as long as we listen to each other. So let’s leave out the Republican talking points, ok? Nobody wants to listen to those.