President Obama might have promised loan relief to the millions of students around the country that have crippling student loan debt. However, with the election of President Donald Trump comes big surprises in the budget.
A survey of college students showed that approximately 50% expected some kind of student loan forgiveness program from the federal government.
Analysis conducted by the US Department of Education projects that borrowers who enroll in any kind of loan forgiveness program would repay every penny that they borrowed and then some. Some of the debtors found within the programs offer monthly payments that are capped to their earnings. Even when this is in place, those who are making payments are projected to pay around 76% more than what they actually borrowed. What is being forgiven is the interest that could be 20 years old or more depending on how long a student has been making payments.
Only about half of the people who enroll in the plans within the 2018 fiscal year would even receive any kind of forgiveness. Some government figures suggest that even that estimate is too high.
There is a lot of paperwork that needs to be completed in order for a borrower to apply for a loan forgiveness program. If they qualify, it’s likely that they will get lower payments, but after making so many payments, it is likely that they will have paid off everything that they initially borrowed to begin with. The debt is too high and students simply can’t make all the payments.
The programs are less than desirable, which also leads to students demanding something better than the never-ending cycle currently in place.