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Sun Jan 19, 2020, 05:35 PM

hardly anyone is paying down their student loans

Student debt is over $1.6 trillion and hardly anyone is paying down their loans
PUBLISHED THU, JAN 1

https://www.cnbc.com/2020/01/16/student-loan-debt-is-over-1point6-trillion-and-balances-arent-going-down.html


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Since the explosion of student debt following the Great Recession, annual repayment rates, or the amount of existing balances lowered, have been just 3%, Moody’s said. Just 51% of borrowers who took out loans from 2010-12 have made any progress at all in paying down their debt.

“While in the past, higher enrollment and rising tuition were the main drivers of growing student loan balances, more recently, slow repayments have become the primary driver,” Jody Shenn, senior analyst at Moody’s, and others said in the report. “Over the next few years, the combination of slow repayments and elevated, if no longer growing, levels of new borrowing will likely fuel further increases in outstanding debt.”

High default rate
There are multiple reasons why the debt levels are not going down.

One is that many borrowers are taking advantage of repayment plans based on borrowers’ incomes, along with some opting for longer repayment options.

Presidential candidates, particularly on the Democratic side, have made reducing or eliminating student debt cornerstones of their campaigns. Moody’s said those kinds of proposals “would stimulate the US economy but have negative effects for some financial institutions.”

In the meantime, the burden of student loans continues to be felt with an 11% default rate that is the highest of any debt category. Education also is now second only to mortgages as the highest form of debt for all Americans.

“Increased reliance on student debt crowds out an individual’s access to other forms of household credit, which likely delays business formation and homeownership, important drivers of economic growth and wealth creation,” Shenn wrote.

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Reply hardly anyone is paying down their student loans (Original post)
Demovictory9 Jan 19 OP
MichMan Jan 19 #1
VarryOn Jan 19 #2
unitedwethrive Jan 19 #3
VarryOn Jan 19 #5
Igel Jan 19 #7
SKKY Jan 19 #4
defacto7 Jan 19 #6
More_Cowbell Jan 19 #8

Response to Demovictory9 (Original post)

Sun Jan 19, 2020, 05:42 PM

1. Hoping for forgiveness?

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Response to MichMan (Reply #1)

Sun Jan 19, 2020, 05:46 PM

2. My thoughts exactly. Nt

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Response to MichMan (Reply #1)

Sun Jan 19, 2020, 05:47 PM

3. I know that is the case for most of my friends, they feel it is better to put money elsewhere

while waiting to see what happens in the election.

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Response to unitedwethrive (Reply #3)

Sun Jan 19, 2020, 06:00 PM

5. I just hope this doesn't become a major campaign issue...

People can get downright pissed about it and not in a way favorable to Democrats.

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Response to MichMan (Reply #1)

Sun Jan 19, 2020, 06:11 PM

7. That's probably part of it.

Also it's just a certain amount off the top. Like taxes. Or paying for a software subscription. Or iTunes. Or Netflix.

Then there's probably the assumption that they'll earn more later and it'll be more convenient--there's all this stuff to buy and things to do now.

I suspect that a lot of it requires looking at the details. Most of the time the easy take-away headline about student loan debt is about 45% right--it's not wrong, because it applies to some people, but it's far from the whole truth because it just applies to those that feed the circulation. How many didn't finish their degrees? How many were boutique degrees that didn't really provide more income but instead worked towards "self-fulfillment"? How many were put on hold because of graduate school or how much of the total is in forbearance until they can finish the hoop-jumping required for government to cancel/pay their loans for them?

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Response to Demovictory9 (Original post)

Sun Jan 19, 2020, 05:50 PM

4. Seriously though, serving 20 years in the Navy, and all the...

...deployments I had to do were more than worth it to have my education paid for, and for that of my kids. I can’t imagine having to pay for student loans on top of everything else.

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Response to Demovictory9 (Original post)

Sun Jan 19, 2020, 06:01 PM

6. I paid back all my student loans, but

they were about $9k in the 80's, and that was from an ivy league school. I have no idea how anyone can handle the load now.

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Response to Demovictory9 (Original post)

Sun Jan 19, 2020, 06:20 PM

8. In 1991 my consolidated college/law school loans were $39k. 28 years later: still $32k

This was despite paying mostly on time for those 28 years, including paying over $23k in the last 4 years. But I did miss some payments/pay late due to two job losses and a medical emergency during that time.

Last year I borrowed the $32k from a family member and paid them off. Now with the same payments, I'm on a 5-year plan to repay my family member (not that they're pushing it). I would *never* have paid those loans off with the penalties and interest and collection costs (despite the loan servicer never having to do any collecting) that were added daily.

I know that a lot of people would be angry if student loans were dismissed. But the system is really and truly broken.

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