“Yet the question still remains, how many years will each borrower have to keep paying this money — money which could be used for more productive purposes, such as purchasing a new home to start a family or to invest in a retirement plan so that he or she doesn’t end up like the 42 percent of people expected to retire completely broke.”
When you get a loan to purchase a vehicle the bank uses the vehicle as collateral until you pay off the loan. When you default on your loan payments the bank repossesses the vehicle and sells it to recover the balance of the loan. A similar process occurs when you default on a home mortgage. In both cases “forgiveness” of the loan results in loss of the item purchased. If you default on your college education student loan the lender can’t “repossess” your education.
Financial consultants advise clients in debt to pay off the highest interest rate one first. If no interest was charged on your student loan you would attempt to wait until your credit card, vehicle and home debts were paid.
Debt is a form of financial slavery. To some degree you are at the mercy of your lender. Since education is the asset accumulated, it should be the asset you lose control of in lieu of loan repayment. I propose that if your education loan was from the government or a private loan backed by the government that you pay it off with service to the government. A reasonable approach may be to credit half of your annual salary toward loan repayment (forgiveness). With your degree you may be able to enter civil service as a GS-7 paying about $36K per year. Under my proposal you would receive full salary and benefits but your loan balance would be reduced (forgiven) $18K the first year. Depending on your career ladder you could advance every year reaching GS-12 in three years ($64K per year). After only four years your $100K original loan would be reduced to zero (forgiven) and you could leave government service or continue.
There are already various education loan forgiveness programs for teachers, nurses, social workers, military personnel, federal employees and law enforcement. I’d rather see these programs modified and expanded instead of your interest deletion program or the programs proposed by Senators Warren and Sanders.
