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Question:
Dear Steve,
When I initially enrolled in college as a young man, I utilized student loans to get my Bachelor’s and Master’s degrees.
I paid them all off following a payment schedule that seemed normal and fair. I later returned to school to get my Ph.D., the next step in my chosen field of Psychology.
I again utilized student loans for some of the costs and fees involved. However, I successfully graduated and fully intended to repay the loans drawing on my early experience of paying back student loans.
In 1996, I was offered a plan to consolidate my loans into one total of $56,430 to be serviced by Sallie Mae. Instead, I took advantage of a period of forbearance right after graduation, not realizing that the payment plan going forward would be very different from my previous loans.
My story has much, but I will cut to the chase. I am now 77 years old and managing a student loan balance of almost $300,000, which continues to grow through exploding capitalizing interest at 9%!
I am baffled that no consumer options are available in every other type of credit: mortgages, auto loans…even the IRS. I could have settled my loan for a substantially smaller amount than my current insanely crazy balance.
I have been in the IBR program. Unfortunately, these programs have the inescapable trap of capitalizing on interest. I have been struggling with payments over the last 26 years with no possibility of paying back the ever-growing balance within my lifetime.
I have been told I can have my balance canceled upon death! Really?! Why have no simple creative, practical consumer options been considered?
Paul
Answer:
Dear Dr. Paul,
I can sum this up without six sessions. It sucks, and it is grossly unfair.
I hate using such blunt language, but under every political administration, the entire student loan situation is best summed up with the word clusterfuck.
Under the new Biden announcement, your Income-Driven Repayment (IDR) payment will most likely go down. But, as you noted, you will probably die before the debt is eliminated.
But that’s not the complete answer. What the final rules will be on the new Biden student loan forgiveness announcement is up in the air. You might receive credit for payments made before the entry into the IBR and give you enough credit to forgive your loans.
My message to you is one of acceptance and patience.
You will have to accept the current system is not perfect, reasonable, or fair.
If your income has changed since you last certified your annual IBR participation, contact your servicer for a lower payment.
Be patient while different sides fight about the Biden student loan forgiveness proposal, and let’s let it all shake out.
If the resistance to the proposed forgiveness does not win in the inevitable court case, then I would bet you will probably find your loans will be discharged sooner than you expect.
You are not alone. I’m here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don’t give up.
Do you have a question you’d like to ask me for free? Go ahead and click here.
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