(WGN) – With the country’s student loan balance around $ 1.7 trillion, the hardship never seems to end.
One in four Americans carries college loans. While many of them are working to pay off the loans, most years, even decades later, are still financially under water. Laura Allen of Chicago is one of many who still has college bills as she nears retirement.
The married mother of three graduated from college in 1992 and graduated from National Louis University. But that success came with a loan of $ 12,000 that has grown to over $ 30,000.
Allen is now almost 60 years old.
“One day I actually added up my payments and almost cried after paying back over $ 12,000 on my student loans,” Allen said.
Respect and forbearance played a part, but she says she always paid the minimum. Even so, she still could not get rid of her student loan debt. Allen says she is angry, hopeless, and frustrated.
“I can’t possibly 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 that student lenders aren’t bargaining.
“Student loans are the cockroaches’ financial motel,” she said. “You get in and you’re trapped.”
Your idea of eradicating the problem is simple.
“Lower the rate to about what the government pays 1% and then just let people pay out the main amount,” she said. “A lot of people like Laura have already paid off the director. That’s the fair way. Take the excess loan interest off. Let the people pay back the original loans. “
In 2020, then-Democratic presidential candidate Joe Biden pledged, if elected, to help financially troubled students by providing $ 10,000 in loans. Now Senate Majority Leader Chuck Schumer and Democratic Senator Elizabeth Warren want the student loan burden to be reduced by $ 50,000.
While Biden is feeling the pressure, Savage believes that Congress needs to formulate a better solution while taking into account those who have made their loan payments over the years.
“So unfair to people who have already paid off their loans, made a big dent in them, or their parents who have saved and saved,” said Savage.
For cases like Allen, a few years before retirement, Savage says the government has different social security plans.
“If you don’t repay your student loan by your social security benefits, they will foreclose your social security benefits,” she said. “In fact, it has happened to more than 115,000 retirees.”
This is Allen’s worst fear.
“We cannot destroy the entire lives of retired people after they pay back the principal amount on their loan,” said Savage. “It’s time to adjust.”
The philosophy applies to aging students as well as parents and grandparents who have helped their children and grandchildren with student loans. Prior to the pandemic, in the second quarter of 2019, just over half, 56%, of the outstanding federal student loan debt was actively repaid. Everyone else was in default or in some form of reluctance or forbearance.
Another breakdown concludes that women hold two-thirds of all student loan debt in the United States. Additionally, 20 years into college, the middle black borrower owes 95% of their student debt compared to just 6% for the middle white borrower.
Despite the financial crisis, Allen expects Congress to throw her a life preserver.
“My hope is that I can do something with Congress because I just can’t pay back $ 30,000,” she said. “I just can not.”