The Washington Post looks at people having trouble paying the loans off, who are praying the Supreme’s allow them relief thru President Biden’s forgivness program….
“It’s like an anchor around my neck,” said Hamilton, a 72-year-old Army veteran in Reno, Nev. “I live on peanuts. … I can never get from underneath this debt.”
There are nearly 47,000 people like Hamilton who have been in repayment on their federal student loans for at least 40 years, according to data obtained from the Education Department through a Freedom of Information Act request. About 82 percent of them are in default on their loans, meaning they haven’t made a voluntary payment in at least 270 days.
“This is sort of a monumental failure,” said Abby Shafroth, director of the National Consumer Law Center’s Student Loan Borrower Assistance Project. “There are so many relief programs in the student loan system to address some sort of financial distress. But it’s this real patchwork, and borrowers struggle to navigate it. The department itself and its servicers often can’t navigate it either.”
While these borrowers represent a sliver of the 43.5 million people with federal student debt, their existence is an indictment of policies meant to help people manage their loans. Years of administrative failures and poorly designed programs have denied many borrowers an off-ramp from a perpetual cycle of debt. Even as the Biden administration tries to remedy these problems — including fighting legal challenges to its plan to cancel up to $20,000 in debt for many — the fixes could still leave vulnerable borrowers like Hamilton on the sidelines….
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“There are student debts that should have been canceled, but no one bothered to do that,” Williams of the Education Department said. “So we’re automatically correcting those errors and discharging those loans.”
Under the initiative, the department will also grant a one-time account adjustment to count the months borrowers postponed their payments through forbearance if they remained in that status for years. Still, other features of the IDR adjustment will shut out many distressed borrowers….
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Advocates have long questioned the rationale behind the federal government’s relentless pursuit of student loan payments from distressed borrowers.
Unlike the Education Department, banks and lenders in the private market routinely write off the debt they can’t collect, and there is a statute of limitations on collection, Shaforth said. While the federal student loan program is not as flexible, she said, the department does have the power to settle, compromise and terminate the collection of debts. She said the agency could use other regulations that give the government an out when it can’t collect a debt within a reasonable time.
“I would think that 40 years should be a reasonable time,” Shaforth said…