"Millions of would-be students turn to the federal government in order finance their education, each taking out thousands of dollars in loans. While that influx of funds allows borrowers to seek a better life by obtaining a degree, it also has to be repaid. And when that becomes impossible for some consumers, debt collectors hired by the Department of Education sometimes resort to garnishing wages.
According to recently released data from the Department of Education, that strategy paid off in the last three months of 2015, with debt collectors bringing in more than $176 million in garnishments [PDF]." …
I also wonder how many people just decide not to pay their loans back regardless of how much they make.
Pay your loans people. I have very little sympathy.
People are paying back but it is costing $$$ to debt collectors to get it.
from the above article
…"MarketWatch points out that other methods, such as rehabilitation — a process that allows defaulted borrowers to become current on their student loans after a meeting a certain number of on-time payments — account for more repaid funds.
Rehabilitation programs collected $1.7 billion, while voluntary payments accounted for $82.9 million for the last three months of 2015…"
There is nothing in the report that shows/proves that repayment of school loans is “impossible.” In fact, I’d bet they never even looked at the possibility of repayment. Nor should they, since that is not part of the collections process.
My experience has always been that lenders are willing to work with borrowers who make an effort to pay and to inform them if they have financial troubles. If they don’t, that’s when the trouble starts.
While I have my own fair share of issues with the student loan crisis, if they have an income (i.e. wages that can be garnished) then they should be paying.
…"For example, the income-driven repayment plan, called Revised Pay As You Earn (REPAYE), lets all federal Direct student loan borrowers cap their monthly payments at 10% of their discretionary income, regardless of when they borrowed or their debt-to-income ratio.
Discretionary income is defined as earnings above 150% of the poverty line and applies to what can be put toward non-necessities…"
Basically the federal program asks that those who are making above the 150% poverty line pay 10% of their discretionary income…and that debt is then erased after 20 years.
This is good.
This will make drive home more personal responsibility and an understanding that debt needs to be repaid. That is a good life skill to develop.
This will also encourage more lenders to lend if they have more confidence that people will be held accountable and pay off their debts. That helps everyone.
@sax pointed out the details of the program, and that program sounds really interesting. 10% of discretionary income?! Sounds more than fair and manageable.
And when people get off that program in 20 years, they have great habits for saving (only 1 out of 3 people save money for retirement…yikes!)
^^the logic of bankruptcy . . . which isn’t generally available for student loans (though it looks like there is a chink in the armor of that general rule).
I don’t like it, but I can see how people get ahead of themselves with all the debt. This is why I don’t get the scorn that some people seem to have for going to school debt free or close to it.
,based on their own logic. Many, many people just ignore their loans. They believe if they never pay the loan will eventually be forgotten about. Many people are used to ignoring medical bills, heating bills etc. and believe those losses will be written off by others.
And thank god I m only paying around 1.5k per semester. Free tuition scholarship FTW.
Call me unsympathetic, but when I see students in state schools whine about how they got zero scholarship and how “unfair” FA is, I wonder if they ever studied hard enough to be eligible for merit scholarship. Of course, I know top tier private universities don’t have merit scholarships, so I get it.
I really don’t think that students who get no merit aid should be going to university. Usually they end up not graduating or graduating just barely and falling into a debt trap. It’s their fault but 18 year olds should not have the chance to make that mistake in the first place.
There are many ways to get a college education without going into major debt. Some employers will pay for some or all of your schooling. Some people can work enough part time to fund their community college courses if they live at home with their parents.
Some people can take out loans and then get them paid off by working in areas that wlll pay their loans.
People need to get creative.
Or if they do have federal loans how lucky are they that they only have to pay 10% of discretionary income and then they can be forgiven… Woo Hoo for them!
One of my kids just had his masters degree paid for by his company. He just has to stay 2 years. That kid has never paid one dime for his education ( BSEE,BA, MS). The other kid just got a job that will pay half her tuition. She can take certificate courses and pay half price while using the high priced computer programs that her job pays for.
Kids boyfriend has had his electrician certification paid for by the company he works for. He paid for a course at the local community college that taught him fabrication. He did so well in that course that a company gave him a scholarship to pay it off and then gave him a job.
Based on what logic do people think that loans will go away??
No logic.
I require our graduating students who borrowed to attend a repayment meeting. I go over all of the plans, and I provide them all an emailed copy of the presentation. They have to complete exit counseling as a condition of receiving their diploma. I send out reminder emails during the grace period and right before repayment begins. I still have several students who have never made a single payment … have not opened any emails sent to them by their servicers … have completely ignored my phone calls/emails/letters to their home address that include detailed information on income-driven repayment plans (including all necessary contact information and links to sign up). I offer to assist them in any way necessary. You can lead a horse to water, but you can’t make him drink.
