Student Loan Forgiveness – Not Much

Frequently you’ll see articles with “Student Loan Forgiveness” in the title.  I believe the student loan power players keep putting out this information in the hope that most people will not realize how terrible the system really is.  They want to lull the public into thinking “Things can’t be that bad.  Look at all the student loan forgiveness out there.”

Nearly always, these pieces are promoting a very limited type of forgiveness that has been available for years.  Let’s look at some circumstances under which loans may be forgiven.  These are from the Department of Education website, https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation#public-service  Check it out if you want more details.  Here are some situations where student loans may be forgiven:

  1. Death  (this is the only one that always works, at least for the person who died.  Not for any cosigners.)
  2. Becoming totally and permanently disabled to the point where you can’t work.  (Even this one has many qualifications)
  3. If the school falsely certified the loan (only under very specific circumstances)
  4. If the school closed before you graduated (only under very specific circumstances)
  5. If the loans was falsely signed for, due to identity theft

There is a program called Public Service Loan Forgiveness, which sounds good, at first.  But after reading further, here is how it works.  The person must be working in specific types of jobs, the full ten years.  They must make ten years of full payments, only on certain types of loans, and only on certain payment plans.  Then they can apply for loan forgiveness.  This may or may not be approved.  The Department of Education has also come out and said that they make no guarantee that the program will still be in existence after the borrower completes ten years of payments!  Not much hope of relief there.

There is more, but you get the idea.  Having the loans discharged when you die is certainly no help to the people who need relief while they are alive.  The other conditions only pertain to a very small percentage of these loans.  The website specifically says: “Note that a Department loan cannot be canceled because a borrower is experiencing financial hardship and can’t afford his or her loan payments.”  Apparently in the Department of Education’s world, financial hardship is always temporary.  If only it were true.  And “experiencing financial hardship” sounds so much milder than “struggling to keep a roof over their heads.”  Which is exactly the situation that many with these loans find themselves in.  Especially seniors.

There is no meaningful help for seniors who can’t afford to pay their loans, yet are forced to pay anyway.  This is wrong.

Things need to change

I’ve been searching the Internet for articles on seniors and student loans.  There are a lot of stories of hardship out there.  What is so frustrating is that these news items have been running for years.  Yet there has  been no meaningful change in the laws that are ruining lives.  So many seniors whose loans have increased by tens of thousands of dollars because of interest and penalties…  There are people who have paid back what they borrowed, and interest on top of that.  Yet they still owe as much as the original debt, or more.  This is not right.  People should not be struggling to keep food on the table because they went back to college years ago.  I recently spoke with a woman whose father had just died in his 90’s.  At the time of his death, he was making payments on his daughter’s student loan, which he had co-signed.  He’d been paying on it for years, and apparently, could afford to do so.  When he died, the servicer immediately demanded payment in full from the daughter!  She didn’t have it.  Fortunately the total owed was less than $3000 by then.  A relative was able to loan her the money to pay off the debt.  But what about the many older Americans who can’t afford to pay and don’t have a relative who is willing and able to help?  They have no way out of a desperate situation.

I’ve called my representatives repeatedly pleading for some relief from these terrible loans.  They’ve told me “It’s the law.” They say it as if that should be the end of it.  Sadly, some people probably take that statement as the final word and hang up.  The members of Congress and the Senate passed those laws.  The ones that don’t provide real relief, even if the senior is forced into poverty by the student loan payments.  Congress and the Senate could change the laws to help people who are suffering, but so far, they haven’t.  It’s highly unlikely that seniors who are struggling financially are suddenly going to get a high paying job or experience some other big increase in their income.  There needs to be loan forgiveness for seniors who can’t afford to pay.  Real change in the laws is overdue.