"The headline for Mr. Jeffrey Dorfman's May 10th article at Forbes blares, 'Student Loan Debt Hits Record High And That's Good.' The economics professor at the University of Georgia then points to a study showing that college graduates, on average, earn $280,000 more than non-graduates twenty years after graduation. He goes on to say that the problem of students who have problems repaying their student loans is 'small and manageable.' Dorfman, a self-described conservative, then criticizes 'liberal' policy prescriptions for lowering the price of college," Student Loan Justice Founder Alan Collinge writes in an opinion article for The Good Men Project.
"First, Dorfman's claim that the problem of students who have problems repaying their loans is 'small and manageable' is outrageously false. A recent Brookings Institution report found that the default rate for 2004 students- who were only borrowing a third of what they are today- is an astonishing 40%. Even subtracting out the terrible for-profit colleges leaves a default rate of 33.4% for the 'Good Schools.' The default rate for more recent students is certainly far higher than this. It is probably very conservative to estimate that well over 50% of students since 2004 have defaulted or will default on their student loans.
Moreover, at the end of 2016, there were 8.1 million people in default on the books. Off-the-books (ie 'rehabilitated') defaulters bring this total to 9.6 million people. At the end of last year, this has likely grown to about 11 million people. This is one-fourth of all borrowers, and this is growing quickly!
Also, the vast majority of the people in the various forgiveness programs such as Income Based Repayment (IBR) and Public Service Loan Forgiveness (PSLF) are being disqualified for one reason or another. Given recent data showing that only 7.5% of the people who thought they were going to get their loans forgiven through PSLF actually will, and that as of three years ago, a whopping 57% of the people in IBR had been disqualified on just one of the grounds the Department of Education has available to it to disqualify borrowers, it would be surprising if even 15% of the people in these programs actually made it through. The rest will be left owing far more than when they entered."
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Publication Date: 5/15/2018