<p>There are already extended loan repayment plans for Direct Loans available, allowing borrowers with Direct Loans exceeding $30K to take 25 years to pay off the loans. Are you suggesting repayment plans that extend beyond 25 years? The problem really seems to be the amount of loans taken out in the first place, isn’t it? And the ease by which students are able to take out school loans, and even use these loans for their daily living room/board expenses without working part-time jobs and cash-flowing as much of their college education as possible?</p>
<p>Sure, doesn’t everybody love lower payments - when people buy cars, they get fixated on the monthly payment, without considering that paying off a car over 7 years versus 3 years means they get to throw away at least 2-3 times their money in extra interest. Better for them to have purchased a cheaper car that they could have afforded to pay off in 36 months. Even better to have paid cash for a reliable clunker and wait to get a better car when finances allow. College students should not be driving around brand new, financed cars.</p>
<p>For a student with $40K in 6.8% student loans, paying the loans off in 10 years means paying $15K in interest with a monthly payment of $460. In exchange for a lower payment of $277 spread out over 25 years, the student will end up paying $43K in interest. What is the opportunity cost lost on paying that extra interest rather than actually investing those dollars? </p>
<p>[Repayment</a> Comparison Calculator | Federal Student Aid](<a href=“http://studentaid.ed.gov/repay-loans/understand/plans/standard/comparison-calculator]Repayment”>http://studentaid.ed.gov/repay-loans/understand/plans/standard/comparison-calculator)</p>
<p>I am sure lenders would be more than happy to offer extended loans to everyone, because that just means more money for the lenders, but do we want lenders making that kind of money off of school loans? Just look at the credit card industry for some guidance. Do we want to encourage students to lock themselves into 25-year repayment plans?</p>
<p>At least with a car or a house, you have something tangible that you can sell if you get into a financial jam and need to sell and get out from under the loan payment. With a house, there is the possibility of having some equity somewhere down the line. With an education, yes, the student benefits, and it is an investment of a sort, but it is not an investment that makes sense for a lender, or for the taxpayers who subsidize many of these school loans.</p>
<p>College tuition would not have skyrocketed at a rate far exceeding inflation over these last two decades if school loans were not so easy to obtain. Thankfully, there are still affordable options out there for students who don’t like the idea of being a debtor for the majority of their adult lives, including attending community colleges, living at home while attending universities and not financing living in the dorm and eating cafeteria food, working while attending college, and choosing to pursue degrees that are rewarded in the marketplace with employment and salaries more than sufficient to handle school loan payments.</p>
<p>I think all prospective college students intending to take out federal loans should be required to take a financial literacy class before they get one dollar of student loan aid. If more college students, and their parents, fully understood the true cost of accepting all of that easy financial aid, they could at least sign on the dotted line fully aware they are signing away a good chunk of their future income. Too many students go into this blind and ignorant, and then graduate and go into shock when their first loan payment comes due six months later (the reason so many students then decide to go to grad school and then take on more debt.)</p>