English 102 Section 16
27 April 2018
How Can We Reduce Student Loan Debt?
Being a college student is all fun and games until the tuition must be paid. Being from a middle-class home it has been quite a struggle for my parents when it has come to pay for my tuition. I have a few grants and even a few amounts of scholarships, but that is still not enough to cover my whole balance. We were not left with much of a choice but to take out loans, something that they did not want to do. My sister, to this day, still has loans in her name that must paid, and I do not want to end up paying loans for the rest of my life. Many people have loans to pay for their tuition. This results in being in debt, do to not paying them, forgetting to pay, or having interest added. The issue with college tuition is deciding how to make it more affordable. Student loan debt can harm and affect many people’s lives. I believe we can reduce student loan debt by seeing how student loans are a scam, how Sallie Mae plans to scale back student loans, how to climb out of student debt, how to reduce loan costs, and how student loans can be forgiven.
Student loans are sometimes labeled as scams because of how much debt they leave people with. Whaley is a “writer and political activist committed to convincing Congress to restore standard consumer protections to student loans” (Whaley 1). I think it was a great idea that Whaley wanted to restore student loans for us. I do feel like there should be some type of assistance to help us out. His devotion to the student-loan cause is prompted by his terrible experiences arising from $50,000 in student loans from Sallie Mae at graduation in 1998 that were subsequently deemed in default. (Whaley 2) Like stated earlier, I can understand where he is coming from. Having a lot of debt for most of your life it not fun at all. As of now, my sister is currently going through tough times, and it is no joke. As time went by, Whaley’s loans by 2005, went more than it was supposed to be, thus putting him in more debt than he was in before. He also learned that universities profit from Sallie Mae. As each student attends the university, the loans that are taken from Sallie Mae returns to the school.
Sallie Mae was the dominant student loan company in the U.S., was initially a government-sponsored entity until it was privatized in 1997. (Whaley 4) This acknowledges the fact that getting student loans is a scam and should not be done. Moreover, when you do not have the money, that is your only choice you have. This article makes me think that there are other loan companies that are a part of this crooked system as well. Most of my sisters’ loans are from Sallie Mae, making me think now that maybe they added more on her loans than they needed to, similar to what Whaley went through. Whaley is still doing some work on trying to get families and even other options to get funding for education.
On another good note, Sallie Mae does plan on scaling back on students’ loans, which I think is a great thing. Being in a lot of debt is not fun at all. One of the things I found that could be a good solution for lowering student loan debt, is a new federal law that cuts down subsidies to private firms that make government pay back student loans. (Kingsbury 2) The government should be trying to help pay a portion back, but not all the student loans. I feel like they have enough money to take care of other peoples’ needs and loans. This is making the rate for student loans to come down and even making it more affordable for students. Kingsbury talks about how it has not really been into motion yet, and that many of the states are not willing to cooperate. I do feel that if the state is in a lot of student loan debt, they should not participate, but if they are they should. We all need help at some point in time in our lives. It also cites the challenges and missteps incurred by the firm including a $25 billion takeover by a group of investors. (Kingsbury 4) This is putting a hold on trying to get the law into motion, as of now I do not think the law has moved forward but it should be in motion.
Everyone should jump on board to make the law of cutting down subsidies and making the government pay back student loans get into motion. Not only that, but me being a student with serval loans out and a sibling who had twice as much loans out and still does not have them paid, makes it better for us. In a Securities and Exchange Commission filing, the company stressed that it will be more selective in originating loans (Kingsbury 4). I feel that there is always a situation for everything. I know the government already does a great bit for us, but this is something I feel that should be taken seriously. If not that, then try and make new ways for college students to get money rather than having to get students loans. I personally do not think they see the issues because they did not have to pay back anything or go through what college students must go through. Not even that, but just think of the people who can afford to pay the rest of their tuition. I think they should put a lot of things in consideration. They could think of something that could be very beneficial for them and for us.
Now we are going to climb out of the student debt. “Anyone who still has federal student loan debt might bene?t from switching plans—even if your college days are well behind you,” says Mulhere. Not only that, but the payment may be reduced when you first pay but hurt you in the long run. You may have to pay more, or it could be the other way around, with larger payments now and lower payments later. You as a person must decide which is best for you and your situation. When you start to repay your federal student loans, and do not decide anything you will be automatically put on a stander 10-year plan with 120 equal payments (Mulhere 3), this way you are paying less, and it will be better for you in the end.
Setting up a payment plan would be a great way to pay back your student loans and climb out of student debt. “Even if you can handle the standard payments, you should switch to an income-driven repayment plan if you work for a nonpro?t or a government agency” says Mulhere. This is since your left-over debt will be forgiven after 10 years of payment, but that is not the only choice that you have. You can also reduce your monthly plan even lower than it is, this is a good thing but can stretch your payments up to 25 years. For you to do it, you may have to combine all your loans together, after being pushed together and your new rate will be based on your average total rate.
In 2016 the rate was 5% by now it is probably made be 7%. You also have a 10-year standard year plan that will be secure for the life of the loan. Though your debt can be erased after 10 years, if you work for the government or a nonpro?t, the period is at least 20 years for everybody else (Mulhere 6). I don’t think that it is fair at all for everyone else; not everyone can get a government job. I think it should be a set year that it will be eased for everyone, it is kind of bias I think and even shows a bit of favoritism. They do have a different type of plan that is suitable for any and everybody. There are ?ve types of income plans, that each have their own requirements. For example, the newest one, Repaye, is open to anyone, but if you’re married, your payments will be based on your income plus your spouse’s instead of yours alone, so you’ll most likely pay more than you would in a different plan (Mulhere 9). I do not really know how I would feel about this plan if I were married. It should be a better payment and they should not have based it off the spouses’ income because they did not have anything to do with that. They should base the loans on the person before they get married.
The next solution I found is how we can reduce the loan cost. I feel that steps should be taken when it comes to borrowing student loans. One of the first of the many steps you should take, is to borrow less than what you think you will need. If you need more, you can always go back and get what you need. If you start off with a lot, you are more liable to spend it all and end up in a bad place in the end. When you have less, you work with what you have and go from there. USA Magazine also gives more tips when it comes to reducing your loan: “pay interest on unsubsidized and private loans while still in school or even during any deferment or forbearance period ask lenders about repayment options such as graduated payments, income-sensitive repayment plans, or interest-only deferment options and even take advantage of interest-rate reduction incentives.”
I have some unsubsidized loans, that my parents have been making small payments on. Now looking at the interest-rate reduction I’m going to look at the loans I have and check and see if I have that. I haven’t asked the lenders about the repayment options, but I am not putting it into consideration. I think another issue we have when it comes to loans, is that we are told to not worry about them until after we get out of college. Which I think is the wrong idea to have, I personally think you should start paying something or doing something with your loans, so when you do come out of college you will not be in debt and will not have that much to pay off.
Another thing I saw that was a great tip was to ask family members if they could possibly contribute to your tuition. I have had some of my family members give me money to help my parents out, even one of my cousin paid the first installment for me, so my mom wouldn’t have to stress about it as much. My parents and I were totally grateful for that because she did not have to do that. Family is always a good support system and willing to help when it comes to a good cause, such as college. Also, “find out what the starting salary is in your field and the region where you expect to live. “Your monthly student loan payment should be five to fifteen percent of your expected gross monthly salary.” (How to Reduce Loan Cost 8).
The last solution I have found is student loan forgiveness. There are different set-ups that can result in the cancellation, discharge, or forgiveness of a federal student loan (Student Loan Forgiveness 1). We should all be acknowledged about such, so that our loans can be effected in this manner as well. Most loans have some type of forgiveness, cancellation, or discharge depending on the situation. There are nine different types of discharges or forgiveness when it comes to loans. The first is Total and Permanent Disability (TPD) Discharge (Student Loan Forgiveness 2), this charge dismisses you from the loan all together, you do not have to pay anything and will not have to worry about the loan ever again. The only way to receive this discharge is if you are disabled, you also must prove that you are disabled.
The Death Discharge (Student Loan Forgiveness 3) is a discharge that if the borrower of the loan dies, the loan will be cancelled and go away. Also, if a parent gets a PLUS loan and dies, that loan will be cancelled as well, but for it to work you must send the school you attended or the loan company a death certificate. Closed School Discharge is another great one, but the discharge only comes if “the school you’re attending closes while you are enrolled and, as a result, you are unable to complete your chosen program of study if you withdraw, and the school closes within the next 90 days.” To apply for a closed school discharge, you must fill out an application from your loan servicer (Student Loan Forgiveness 5). There are many more discharges and loan forgiveness’s, but I also feel that there should not even have more, just to make it fair for everyone. But a discharge that everyone can follow under, I feel that there is something out there for everyone.
These are many different ways on how I feel we can reduce student loan debt. I know that there is more out there that can help and there is more that can be done to help. I do feel as though by 2025, that loan debt is going to be high and out of this world if something does not get done. But I can not change this by myself, I’m only one person and I know it will take more than one person for this to change. Student loan debt should and can be lowered and changed, we just have to work together and make it happen.
Works Cited Page
“How to Reduce Loan Costs.” USA Today Magazine, vol. 127, no. 2639, Aug. 1998, p. 16.
Kingsbury, Kevin. “Sallie Mae Plans to Scale Back Student Loans.” Wall Street Journal, Jan 05,
2008, ProQuest, https://search.proquest.com/docview/399019880?accountid=28698.
Mulhere, Kaitlin. “Climb out of Student Debt.” Money, vol. 45, no. 10, Nov. 2016, pp. 29-30.
“Student Loan Forgiveness.” Student Loan Forgiveness | Cambridge Credit, www.cambridge-
Whaley, Mary. “The Student Loan Scam: The Most Oppressive Debt in U. S. History–And How
We Can Fight Back.” Booklist, vol. 105, no. 7, 12/1/2008, p. 10. EBSCOhost.