T Nation

Only 40% Of Fed Student Loan Borrowers Are Paying



This should end well.......


I am part of the 40% that does pay... does that make me stupid or responsible... I can't honestly tell.

I'm currently evaluating my finances to pay it off sooner, though I know I can take that money and knock off 10 years on my mortgage loan, so its an easy decision. One thing they don't tell you also, and as someone who needed student loans for school I had no choice, but a lot are variable interest rate. Soon as you graduate, combine your student loans into a single loan, get it at fixed rate, and get it through a credit union, etc. You'll save yourself a lot of grief, and most importantly, there won't be any surprises on interest changes when the government realizes their predickament (intentionally misspelled).


This is so true, and it is exactly how I handled my loans after graduation. Saved every cent and paid in full the first year.
When I went back for my MBA years latter I did the same thing again.

But as to the first question, I have a nagging suspicion that we both might be chumps.


Sorry I'm not paying mine right now either. I had a good job when I got out of college, but during the "great recession" I got royally burned and haven't really been able to recover since. So now I have a decent job that pays the bills to keep a roof over my head and by lights on. Im in a job that people don't even have degrees are working beside me.

I'm not bitter. I just wish I took that 40k and invested it in google, amazon, apple, and whatnot.


I just took my Sallie Mae exit counseling thing online and in order to pay my loans off in 10 years they recommended that I needed to make 400k per year. They honestly think you should only pay 8% or less of your income towards your debt. I can guarantee if I was making 400k per year I would still live how I do now and pay the loan off in 9 months.

A lot of people don't take loan repayment seriously and just think debt is something you're supposed to have. Someone from my school sent out a petition for us to be included in a government bailout--should one happen. I did not sign it out of principle because that's total bullshit. Go back and read what you agreed to on the loan.

I expect this is what they originally wanted to happen but now it's getting further out of control, hence the reason loan rates are rising drastically. It took me almost 30 minutes to figure out my monthly payment through Sallie Mae because they kept trying to put me on a different repayment plan that extended the term of the loan. They want to take part of my paycheck for the rest of my life.


I dont have any sympathy or respect for someone not paying or trying to default on their student loan. You borrow money, from the government no less, spent it freely on what you needed it for knowing that it would need to be paid back and with interest. Nobody forced you to do it, nobody tricked you and you have an obligation to pay it back.

Any excuse for not, is just an excuse. You should not borrow such a large amount, knowing the risks and amount of leverage you are putting yourself in if you do not have a plan or confidence to pay it back. Blaming circumstance, others or enviornment is just an excuse and an abdication of responsibility.

This last part is soley annecdotal but I have encounted a few people who are having huge issues with paying back or managing the debt from student loans(one im related to and offering financial coaching to). The same people bitch about the goverments debt, corporate bailouts and companies using chapter 11 to avoid paying obligations while CEO's still collect a paycheck. Never do they see the hypocrasy.

Keep in mind I am 4 years removed from college and I will have my student loans paid off in full this November. I made sacrifices to pay them off as fast as I could because I was raised to fulfill my obligations that are self imposed. I actually had to borrow almost 5K from my father when I was 16. It took me 3 years, and despite my father being very wealthy and I working low paying jobs while in school, I paid back every cent. The only reason I had to take student loans in the first place was because I failed out of school, lost my scholarship and had to borrow to get back in and pay for everything since I didnt make enough and didnt want to wait longer to slowly get my degree. On top of 15k+ loans I racked up 10k+ in CC debt for the rest and some bad decisions(havent carried a balance on my cards ever since paying it off).

I NEVER once blamed anyone but myself for the circumstances that lead to my debts and NEVER once asked for help or forgiveness on them or gave an excuse as to why I shouldnt have to pay it back.


I'm in Canada, so my situation is a little different, but so far I've done a pretty good job of keeping the money I have saved equal to the money I owe (I won't have to pay any interest until 6 months after I graduate). I'm hoping to be able to pay it off as soon as I'm out. Granted, it'll be a rough couple years after that, but I'd rather be flat broke right out of university than have a massive amount of student debt to pay back.

I don't understand how anyone can just be "okay" with owing so much.


I remember a comedean, which one I dont, had a joke about a bum asking him for change saying he is broke. His reply was you're not broke, you're even.


Some people I feel bad for, others I do not. I personally knew what I was coming up against when I took loans (and am now sending all extra cash to pay off my loans). I also know people that it was almost like predatory lending, no one should loan money to that person but somehow they still got loans to cover all 4-5 years of schooling, no way they were going to get a job after school to pay for it and no one told them either.

Not surprised that only 40% of borrowers are paying back their loans.


You touch on something important here. No one seems to think they should work while in school anymore. When I was getting my undergrad, I worked my ass off, which is why it took me just over five hers. I managed a pool and water store during the week, bounced at the local clubs at night, and freelanced repossessions for two furniture stores, two appliance stores and two smaller consumer finance companies. Bouncing let me get my social life in play, and repo' ing left me with a lifetime of funny stories.

Years later when I went back for my MBA, I was working over sixty hours a week managing a dealership with a wife, a toddler and a bun in the oven as well.

As the saying goes, if there is a will there is a way.


To be fair, more than 25% of the 28 million people with loans are still in school. The 40% is a little misleading in that respect since more than 50% of the people with loan payments due are in fact paying them off. Only about 10% of people with loan payments due are actually in default.

The bottom line is that it still represents a FAR better expenditure and investment in the country's future, even if ALL the money never got paid back, then other welfare programs that make payments to people who are never required to pay back anything and are doing far less to contribute to the country's economic well-being than college graduates are.


Similar to when I posted in the Financial Advice topic about paying off loans early. An extra $50 a month can make a big difference. Pay down the principle sooner, even if not immediate, and you'll save thousands in interest and payments later on. There are many ways to cut costs and save money to get this done.

To be nice and save you time digging, here's a calculator online to show you based on your amount owed and term of the loan, if you add 'x' principal what your savings will be over time. Its an eye opener if you're unfamiliar.


And yes, I still haven't paid mine off yet, but based on that calculator I'm figuring what extra I can put towards my existing loans to get out of debt sooner (and by debt I mean loans, not credit card debt... credit cards are the biggest joke in the history of intelligent finance). If I had to guess, loaners will either need to push the collection or hide their losses. Hiding losses will catch up to them. When that time comes, I'd rather have paid all of my student loan off, then be sitting there risking an upswing or "change" to help them recoup.


The personal debt and student loan bubble is a HUGE problem, and will only get worse in the coming years. I'm expecting a push from congress at some point for some sort of Student loan forgiveness program to get pushed through.

Not saying it's a good thing, just saying that they've tried it before, and will more than likely keep pushing it until it gets through.


If DB's stats are right, the fallout and backlash from a student loan forgiveness program will be too great for any administration to handle. Even at 40%, that means you just screwed over the 60% of responsible people and punished them, and everyone historically, for paying back their debts. Aside from the anger, imagine the demands/protests etc for those wanting to be paid back for the loans they paid while others got a free pass.


Is there anything that lists the actual amount being paid back? I wonder how many people either historically and currently were put on extended payment plans and end up paying their loan back +50%.


very good point.


Here's some interesting data that's tangentially related to the thread topic. Apparently, more scholarship money ends up going to wealthier families than it does to poorer families. The article's author claims that isn't fair, but I think it's more than fair. Scholarship money and grants aren't the same as student loans, whether they are subsidized or not.

Scholarships and grants are merit-based and given to students who write something, do something, earn grades at or above a certain threshold and so on. Students from wealthier families generally do better in school than poorer students do. Their parents are likelier to have college educations, they're likelier to have attended better schools and so on. There's nothing unfair about them earning scholarships at all.



Waittz: I like it. No one forces you to go to school. No one forces you to buy a car. No one forces you to buy a house. You borrow money from someone pay it off.

Yes this includes you federal government.

I don't need to hear any sob stories from anyone. I'm paying my loans off currently as fast as I possibly can. And taking out the absolute minimum needed as I begin working on my masters.


If you lend some schmuck a large sum of money when they have no means of paying it off..... more fool you. Unfortunately, because the government is doing it.... more fool all of us.


The interesting and sad thing, is if they do this "loan forgiveness" there won't be protests from the people who paid it off, why? Because they'll all know someone who just saved money or be parents who may have paid theirs but are happy their child now doesn't have tens of thousands of debt.

I'll be pissed though, and I'm certainly not paying it off any faster after reading those articles. I'll save my money and put it to use elsewhere, thanks.