For many people, the two worst words in the English language are “Sallie Mae.” Like a demon from the pits of hell, this beast arises every month for her pound of flesh in the form of burdensome student loan payments.
Think I’m exaggerating? Consider that hundreds of thousands of people are currently struggling with a combined one trillion dollars of student loan debt.
And it’s not just the young suffering under the burden. Because student loan debts cannot be discharged in bankruptcy, they can follow you for decades. In fact, according to the Huffington Post, the total amount of outstanding student-loan debt among people over age 50 reached $155-billion in 2012. Many senior citizens are seeing their Social Security checks garnished because of delinquent student loan payments.
Some, like 44 year old Miami lawyer Nicole Jackson, have even given up on the thought of ever paying off their student loans, knowing they’ll go to their graves still owing money.
In a Business Insider interview, the 44 year old African-American describes how she sees no solution to paying off $186,000 worth of student loan debt, much of it amassed while attending the University of Miami law school. What was essentially a $100,000 debt when she first graduated has now ballooned to $186,000 because of deferments and accrued interest.
“I worked for the state of Florida most of my [career] and the most I was making was $50,000/year. With three kids, it wasn’t enough money,” she explained to Business Insider.
The student loan payments put a squeeze on her financial life, even exceeding her mortgage and car payments. Last year Ms. Jackson enrolled in an income based repayment plan for her federal student loan which reduced her monthly payments to $74/month. At that rate, even if she lives to 100, she will have only paid off $50,000 of the $186,000 tab.
She admits she sees no way of ever paying off her student loans. Instead, she has turned her attention to saving for her kids’ college educations so that they hopefully won’t find themselves in the same predicament.
“I don’t want my kids going into life with this [student loan debt] over their heads,” she proclaimed.
A survey by the American Institute of CPAs finds that student loan debt has forced a significant portion of Americans to delay purchasing a car, buying a home, saving for retirement, and even getting married.
Many student loan advocates are asking the government to step in and provide greater assistance. If automakers and large corporate banks can get bail-outs, why not hard working Americans holding student loans?
Michigan representative Hansen Clarke, has called for some form of student debt forgiveness. He suggests full loan forgiveness for current borrowers who have paid the equivalent of 10 percent of their discretionary income for 10 years.
President Obama, likewise, has introduced a proposal that would let borrowers pay 10% of their income toward student loan payments, and after 20 years have the remainder of their student loan debt forgiven completely.
Others have argued for less radical measures. They suggest, for instance, that student loan debt be dischargeable in bankruptcy like any other debt. Yes, a person would have their student loan debt wiped clean but also suffer the consequence of a blemished credit rating. But the choice would be theirs to make.
Until something is done, however, millions of Americans will continue to suffer under the oppressive weight of student loan debt.
BMWK – what do you think? Is it right to ever give up on paying off your student loan debt? Should the government ever consider a bail-out of student loan borrowers in the same way it bailed out banks? Is it fair that student loans can not be discharged in bankruptcy?