Your Questions About Student Loans Forgiveness
Thomas asks…
What would the impact be on the economy if there was loan forgiveness on all outstanding student loans?
What would the impact be on the economy if there was loan forgiveness on all outstanding student loans? Especially now during the financial crisis.
Joe answers:
There would be an increase in consumer spending and the national debt will be reduced. Not having to pay your loans will encourage more people to study, and the Gvt would not have to pour money into programs like EOP, SEEK, and HEOP. BUT we collectively as American owe 44 Trillion dollars in school loans while only a couple million dollars are poured into education. The offset is tha this money will be paid back in about 30 years while we can increase our economy by not sending in 1 grand a month in loans. This creates a domino effect that digs us out of deficit faster than Obama can do it.
Nancy asks…
Pay off student loans within 3 years or stretch them 10 years and qualify for public service loan forgiveness?
I will have about 50,000 in student loans at the end of my doctoral program. The public service loan forgiveness requires 120 consecutive payments before the government pays the remaining portion. I could stretch the loan 10 years and qualify for loan forgiveness or make the necessary sacrifices to pay the loan in full within 3 years.
Joe answers:
Chuck:
The interest saved by paying the loan off in 3 years will more than make up for any amount forgiven by your employment in a public service profession.
If you were already planning for a career in public service – good for you – and far be it for me to discourage you from pursuing that path.
If you weren’t sold on a career in public service – don’t forget that the private sector pays far more in almost every instance.
I love numbers, so let’s look at an example:
Paying off $50,000 at 6.8% interest over 3 years will require a monthly payment of $1539. After you make 36 of those whopping payments, you will have repaid $55,414 – which is only $5,414 in interest.
Paying off that same $50,000 at 6.8% over 10 years requires a monthly payment of only $575. On the other hand, you’ll pay $69,048 in total – that’s $19,000 in interest – and 14 grand more than you’d pay on the 3 year plan.
Your decision to participate in the public service forgiveness plan will not save you $14,000. Your decision to make the payments in 3 years will. If you can afford to make $1500 monthly payments – that’s the far better option.
Good luck!
George asks…
Owe over $100K in students loans from graduate school. Are there any Student Loan Forgiveness programs there?
I owe over $100,000 in student loans from grad school. I DON’T plan on paying on them until I’m 60 years old! That’s out.
Does anyone know of any Student Loan Forgiveness programs out there?
Joe answers:
Well, consolidating your loans may be an option, but it simply gives you a different loan with different terms and a longer repayment than what you probably have now. And consolidation interest rates are no longer the bargain they were even a year ago. Look carefully at them before you leap.
Have you looked at income contingent repayment structures for your debt? If not, contact your servicer(s) now about this.
Loan forgiveness is generally associated with public service employment–teaching in low income areas, or teaching math and science in underserved areas, or by being part of Americorps. Again, contact your servicer, but you may find, to your regret, that you have overborrowed and are in repayment for the long haul or must commit to teaching for a number of years. Depending on your age, situation, and plans, you could also consider some of the military options where the Army, as well as a couple of other branches of the service may pay your loans for you while you are enlisted. But, and YMMV, if you don’t want to serve your country, this is not the option you want to explore and commit to.
Powered by Yahoo! Answers
