(WGN) – As the nation’s student loan balance hovers around $ 1.7 trillion, the struggles seem endless.
One in 4 Americans has college loan debt. While many of them are working to pay off loans, most are still financially underwater years or even decades later. Laura Allen of Chicago is one of many who still have outstanding college bills as she nears retirement.
A college graduate in 1992, the married mother of three graduated from National Louis University. But this achievement was accompanied by a loan of $ 12,000 which soared to over $ 30,000.
Allen is now almost 60 years old.
“I actually added up my payments one day, and I almost wanted to cry because I paid off over $ 12,000 on my student loans,” Allen said.
Postponements and tolerance played a role, but she says she always paid the minimum. Yet she still couldn’t get out of her student loan debt. Allen says she feels angry, hopeless and frustrated.
“I can’t be the only one in this situation, and I know even a loan shark would negotiate,” she said.
Personal finance expert Terry Savage says the sad reality is student lenders won’t negotiate.
“Student loans are the motel of finance,” she says. “You come in and you are trapped.”
His idea of exterminating the problem is simple.
“Cut the rate to about what the government pays, 1%, and then ask people to pay only the principal,” she said. “A lot of people like Laura have already paid the principal. This is the right way. Removal of excess usurious interest. Let people pay off the initial loans. “
In 2020, then-Democratic presidential candidate Joe Biden pledged, if elected, to help struggling students by canceling $ 10,000 in loans. Now Senate Majority Leader Chuck Schumer and Democratic Senator Elizabeth Warren want to see the student loan burden reduced by $ 50,000.
As Biden feels the pressure, Savage believes Congress needs to come up with a better solution, while taking into account those who have made their loan payments over the years.
“So unfair to the people who have already paid off their loans, made a big dent on them, or parents who saved and skimped,” Savage said.
For cases like Allen, a few years away from retirement, Savage says the government has other plans for his social security.
“If you don’t pay off your student loans when it’s time to collect your Social Security, they will, yes, top up your Social Security benefits,” she says. “In fact, it has already happened to over 115,000 retirees.”
It’s Allen’s worst fear.
“We cannot destroy the entire lives of retired people after paying off their loan principal,” Savage said. “It’s time to adapt.”
The philosophy applies to aging students, as well as parents and grandparents who have helped their children and grandchildren with student loans. Before the pandemic, in the second quarter of 2019, just over half, 56%, of outstanding federal student loans were actively repaid. Everyone was in default or in some sort of restraint or abstention.
Another breakdown concludes that women own two-thirds of all student loan debt in the U.S. What’s more, 20 years after entering college, the median black borrower owes 95 percent of their student debt, up from only 6% for the median white borrower.
Despite the financial crisis, Allen is counting on Congress to give him a lifeline.
“I’m hoping I can do something with Congress because I just can’t pay $ 30,000 back,” she said. “I just can’t.
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