Student Loan Debt- Should It Be Forgiven?

Monday, March 9, 2009

Last week I followed a Tweet from GeorgeGSmithJr to an article on The Huffington Post. The topic is forgiving student loan debt to help stimulate the economy. An attorney from New York has started a petition on Facebook to cancel loans so that those monies can be injected back into the economy.

The comments on the article are interesting and range from (and I'm paraphrasing) "Why not help those who are struggling?" and "If bankers can buy $40,000 chairs then why not?" to "No way! You willingly took out the loans, they should be paid back in full."

George and I had a
conversation where I said that I didn't want to be seen as a deadbeat. The loans are my responsibility but the monthly payment amount is one we just can't swing right now.

I spoke with the Department of Education about my loans just last week. They've advised me on the best course of action given our situation. I'll be keeping the loans in forbearance status but making a payment we can afford which will go more towards the principal than the interest.

I think the petition has some merit and is worth further investigation. I don't think loans need to be entirely forgiven but drastically reducing the interest rates, forgiving the interest that has accrued to date or allowing people to volunteer to work off the debt are ideas I think the government should at least look into.

The idea of fairness and whether this type of plan would actually help stimulate the economy is a slippery slope for sure. But so many people I know bought into the idea that we needed to go to college or else we'd be failures, and we went to college thinking we'd definitely be able to pay back the loans easily because a degree automatically guarantees a good job. I can't speak for anyone else but the monthly payment the bank wants would take a huge chunk of our monthly expenses.

Are you weighed down by student loan debt? Have you found a payment option that works well for you? What do think of the petition?

(photo from Google Images)


  1. I currently owe around $26K in loans. I pay roughly $300 a month.....for the next 30 years. It is killing me. The number is not getting any smaller. Shoot, just give me lower interest at least. I'm at 8%.

    I would love something geared towards student loans to stimulate the economy.

    And this is my latest vent. I did a work related Masters Degree in 2000. I paid out of my own pocket knowing that it would be a potential raise in salary and new position.

    I got an e-mail forwarded from admin at work today. The school where I went is offering the Masters Degree program at 40% off for us. Will they remove 40% of my loans. I'm pretty pissed off.

    Ok, my vent is over!

  2. This is tough for me. I have a personal stake in this argument which makes it hard to be logical. I have student loan debt and no degree to show for it which is my own stupid fault. So I'm all for whatever it takes to get this off our backs, but I did borrow the money knowing that it would have to be repaid at some point.

    So. There you go. Clearly, I don't have a rational response, but then no one's expecting one from me, right?

  3. AJM- Ouch! That's harsh. This is the type of situation that (IMHO) makes the petition worth looking into.

    Steph- I'm with you. I don't want the loans to disappear (though it would be nice) but a plan to make repayment not such a hardship is worth a looksee.

  4. I actually volunteered to get some of my loans forgiven. I spent a year as an AmeriCorps volunteer and received about 4800 in loan forgivness plus a monthly stipend. I think these types of programs are a great way to manage student loan debt - if you have the time to do it.

  5. I think your ideas for making things easier for student loan sufferers -- cutting interest rates, forgiving interest accrued, working off loans -- sound good. Hard for me to weigh in because I'm not in your shoes, but I think it's as good an economic stimulus as any, and for people who have only been trying to better themselves in the first place! Hang in there . . .

  6. Will they forgive the parent loans--because that will be our burden.

    It's an idea that has some merit--I'd be for reducing the interest to practically nothing, but keeping the principal. You don't want to be unfair to the people who decided they would forgo college because they didn't want to take on the debt.


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