Tomorrow, 04/13/2016 as a part of the Million Student March, students all over the country will take to the streets demanding that all student debts be erased.
While traditional protest is absolutely needed to bring the issue of unsustainable student debt and its evils to the front of the political discourse, total forgiveness is not the best answer.
Student debt is a monumental societal problem. Further, anyone with a calculator and a few basic statistics on the magnitude of the problem can quickly figure out that massive portions of these unsustainable debts will not be paid back. As the adage goes, “debts that can’t be paid back, won’t be paid back.” Without drastic intervention from the federal government, these overhanging Insolvable (and unpaid) debts will cause untold suffering for millions of American families for decades to come.
What is the most equitable way to determine who has to pay their debts and who doesn’t?
What is the most beneficial way for society as a whole to reduce these debts?
What is politically feasible?
How do we make sure that we stop student debt from re-accumulating?
For the first three of these questions, there is no perfect answer. While total and immediate forgiveness sounds good, vaporizing $1.2 Trillion of owed money is highly unlikely actually to happen and could have significant destabilizing effects to the federal budget and the broader economy.
The best answer for dealing with the already accumulated student debt may already exist in the form of Income-Driven Repayment programs currently available. While the awareness and complexity of these programs are not optimal, the idea that those who can afford to pay should pay and those who cannot afford to pay should have protection against payments they cannot afford is both compassionate and fair. There are certainly adjustments that need to be made to the Income-Driven Repayment programs, but the underlying concept is sound.
The programs need to be simplified
End of term loan forgiveness needs to be made tax free
Creation of a mechanism to apply income-driven repayment to private student loans
Enlistment of the private sector to drive awareness of, and enrollment in, these programs (The Department of Education granted loan servicing monopolies clearly have not been getting the job done)
Finally, bankruptcy laws must be reformed, so student debt is easier to resolve through the bankruptcy process. Bankruptcy courts are specifically optimized to evaluate what debts are unpayable and constitute unreasonable burdens for individual borrowers—why should student loans be treated differently?
As far as reducing the creation of new student loans, creating an entirely new free higher education system overnight won’t happen. In place of this, federal student aid in all forms should immediately be banned for all for-profit colleges (this is corporate welfare in its purest form), community college programs should be expanded, and deep, mandatory, tuition cuts should be enacted at all state schools to force cost discipline on these programs.
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.