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COLUMN: Forgiveness is worse than we thought

The following article is an opinion piece and reflects the views of only the author and not those of AllOnGeorgia.


Biblically speaking, forgiveness means that when someone hurts us, we are under an obligation to God to forgive that person The government is neither a God nor a person under the obligation to forgive and there is no “hurt” with regard to student loans.

Yet, here we are.

The federal government announced Wednesday that it plans to “forgive” $108 billion in student loan debt as part of a loan forgiveness relief program.

Under the program, loans are forgiven after “enough” payments are made. Sometimes this period is ten years, other times 25 years, or often somewhere in the middle. Those eligible for this forgiveness must be in the earnings-based repayment plan, which formulates a monthly payment amount based on what money someone is earning instead of the actual value of the loan, the term of the loan, and the interest rate.

Roughly $29 billion of the debt is from people who have passed away or are permanently disabled. While those circumstances are unavoidable, $29 billion is still a considerable sum of money and it’s perplexing to ponder what type of loaning practices would lead to that many people getting to a point where they’re not physically capable of making payments.

The biggest problem, however, is that the Government Accountability Office, an independent nonpartisan check on spending, says the estimates of $108 billion are unreliable and there’s really no way of telling how much the forgiveness programs will actually cost the federal government, or rather, ‘taxpayers.’

Here are just a few of the hard-hitting points from the GAO’s audit of the Department of Education’s loan program practices:

  • The Department of Education has failed to show how students or the department benefit by capping many debtors monthly payments at 10% of their earnings. The money is often never recouped.
  • The Dept. of Ed. wrongfully assumes borrowers enroll in the earnings-cap programs as a temporary fix, not for the term of the repayment, when in fact borrowers never revert back to a conventional payment plan.
  • 24% of borrowers are in an earnings-cap program, up from just 10% in 2013
  • From Fiscal Years 1995 to 2017, $355 billion in student loans that should already be in repayment were issued to borrowers but only $281 billion has come back in through payments.
  • While everything else is adjusted for inflation, the Dept of Ed. does not consider income increases based on inflation, which causes a greater shortfall between borrowed debt and repayment amounts.

You can read more of the 100-page report here.

Even if we weren’t $19.9 trillion dollars in debt and even if the US wasn’t unable to point to a single program that has been improperly implemented, what is all this jargon about “forgiveness?”

In 2012, 71% of four-year graduates had loan debt on graduation day. There are currently 44 million borrowers with a whopping grand total of $1.3 trillion in student loan debt…and climbing. The delinquency rate is 11.1%!

As someone who has student loans, I can tell you that they aren’t hard to pay back. They may not be fun to pay back, but they certainly aren’t difficult to pay back. How can I say that? Because every month I’m inundated with emails from my loan company asking me if I would like to reduce my monthly payment, if I need to defer payments because of financial hardship, or if I want to discuss consolidation. If, at some point, my loans become unmanageable, I have other options outside of just walking away.

I can’t belabor the point enough: student loans are a choice. I worked through graduate school, but I could have spread my time in my program out by a few more semesters and paid for it myself. I CHOSE to expedite the process and assume the debt. No one made me, no one influenced me, and no one told me that if I did, some day the federal government would forget about it.

This is not real life. Mortgages, car loans and leases, credit card debt – none of it is subject to forgiveness. Ever. So, why student loans? If you’re not willing to pay for the cost of investing in yourself, in what will you ever be willing to invest?

And one more thing. So many people in my generation, the generation immediately preceding mine, and the generation after mine blame our elders for the mortgage crisis. They are, indeed, very much to blame. The bitterness from younger generations is still raw and while lending practices have changed considerably, the housing industry may never be the same. But nothing about student loan lending practices is changing. When this bubble bursts, and it will, there will be no one else to blame. And the effects will linger much longer than they did in 2007.

Jessica Szilagyi is a Statewide Contributor for AllOnGeorgia.com. She focuses primarily on state and local politics as well as issues in law enforcement. She has a background in Political Science with a focus in local government and has a Master of Public Administration from the University of Georgia. Jessica is a "Like It Or Not" contributor for Fox5 in Atlanta and has two blogs of her own: The Perspicacious Conservative and "Hair Blowers to Lawn Mowers."

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