{"id":2344700,"date":"2024-09-23T08:52:58","date_gmt":"2024-09-23T12:52:58","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/6-years-into-loan-payments-most-students-further-in-the-hole\/"},"modified":"2024-09-23T08:58:42","modified_gmt":"2024-09-23T12:58:42","slug":"6-years-into-loan-payments-most-students-further-in-the-hole","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/6-years-into-loan-payments-most-students-further-in-the-hole\/","title":{"rendered":"6 Years Into Loan Payments, Most Students Further In The Hole"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2F6-years-into-loan-payments-most-students-further-in-the-hole%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2344700&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>The article discusses the ongoing\u2063 issues with federally subsidized\u200b student loans in the \u2063United States,\u2064 highlighted by a recent analysis from the Congressional Budget Office (CBO).\u200d It emphasizes that a significant portion of borrowers \u2064are not repaying \u2063their loans\u200c effectively, particularly through <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bidens-new-student-loan-bailout-plan-would-cost-475b-over-next-decade\/\" title=\"Biden&#039;s student loan bailout plan: 5B over next decade.\">income-driven\u200c repayment<\/a> (IDR) plans, which allow \u200bfor reduced or even zero payments. As a result, many \u2062borrowers see\u2062 their debt continue to grow due to\u200b accumulating\u200d interest, and over 75% \u200cof those on IDR experienced an increase in their \u200cloan balances over six years.\u2064 <\/p>\n<p>The article also points to a troubling trend in higher \u200ceducation, \u200cwhere \u200ca substantial percentage of federal loans are issued to students at institutions with low graduation rates. About half of all \u200dloans\u2063 went to students attending\u200c schools where less \u200dthan 46% graduated. Many borrowers \u200bwho financed only one \u200bor two years of\u2063 college often default \u200don their\u200c loans and have little earning potential because\u200d they did not complete a degree.<\/p>\n<p>The piece argues for \u200ca reconsideration of the \u200bcollege system and\u200c suggests that not all\u200d students \u2063may be suited for traditional \u2063college education immediately after high school. It hints\u200b at the \u2062need \u2062for better educational \u2064pathways, including vocational training, to\u200c address systemic failures that contribute to escalating student debt and a lack of degree\u200b completion.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<div>\n<p>The old aphorism calls a picture worth 1,000 words. But in at least one case, a series of pictures can be worth more than $1 trillion.<\/p>\n<p>A recent report from the Congressional Budget Office (CBO) provides helpful charts showing the many problems associated with the current federally subsidized loan program. As with many crises caused by government, the problem with student debt has many causes, and Democrats&rsquo; proposed &ldquo;solution&rdquo; &mdash; making all taxpayers responsible via massive &ldquo;<a href=\"https:\/\/thefederalist.com\/2022\/08\/26\/how-joe-bidens-welfare-for-college-grads-will-stoke-inflation\/\" target=\"_blank\" rel=\"noreferrer noopener\">loan forgiveness<\/a>&rdquo; &mdash; would only make the problem worse.<\/p>\n<h2><strong>Students Not Repaying <\/strong>&lsquo;<strong>Loans<\/strong>&lsquo;<\/h2>\n<p>The CBO <a href=\"https:\/\/www.cbo.gov\/system\/files\/2024-09\/58963-student-loan.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">analysis<\/a> examined federal student loans that began repayment from July 2009 to June 2013, tracking those loans through 2019. The period analyzed came after the worst of the Great Recession and before the Covid pandemic scrambled the economy and led to a massive student loan amnesty in 2020.<\/p>\n<p>Over the four years examined, the percentage of borrowers who chose income-driven repayment (IDR) more than tripled, from 10 percent in the first year to 33 percent in the fourth year:<\/p>\n<figure><figcaption><\/figcaption><\/figure>\n<p>As CBO explained, while fixed payments remain constant throughout the entire repayment period, the IDR process &ldquo;allow[s] repayment over a longer period &mdash; typically 20 or 25 years instead of the usual 10 &mdash; after which any remaining balance is forgiven,&rdquo; and can require &ldquo;payments&rdquo; of as little as $0, which &ldquo;still count towards the total number of payments required for forgiveness.&rdquo;<\/p>\n<p>Unsurprisingly, the number of debtors choosing this option has grown &ldquo;as plans with smaller expected payments and earlier loan forgiveness have been introduced and become more widely known.&rdquo; The movement toward IDR and zero-dollar &ldquo;payments&rdquo; meant that debtors made substantive payments &mdash; defined as a monthly amount of at least $10 &mdash; in only 38 percent of the months in which an average loan was in repayment status.<\/p>\n<p>With borrowers making substantive repayments only about one-third of the time, it should surprise no one that after six years, the amount owed by the median (i.e., 50th percentile) borrower <em>rose rather than fell<\/em>:<\/p>\n<figure><figcaption><\/figcaption><\/figure>\n<p>Some borrowers paid off their loans in full &mdash; in fact, nearly 10 percent had done so by the end of four years, and another 15 percent had shrunk their balance roughly in half by the end of the six years studied.&nbsp;<\/p>\n<p>But on the flip side, a majority of borrowers saw their loan balances rise after six years, because their &ldquo;payments&rdquo; (such as they were) did not exceed the amount of interest that had accumulated on the loan. It should surprise no one that those in income-driven repayment made the fewest substantive payments and were much more likely to see their balance grow. In fact, more than three-quarters of participants in IDR saw their loan balance grow over the six-year period, whereas a slim majority of those using fixed repayments saw their balance shrink:<\/p>\n<figure><figcaption><\/figcaption><\/figure>\n<p>The data points show how much the IDR process has turned &ldquo;loan repayment&rdquo; into a joke. Borrowers are eagerly signing up for a plan that frequently sees them repaying little to nothing, which only makes their debt grow larger. As more borrowers play the IDR game, Democrats are citing this &ldquo;crisis&rdquo; created by wholesale nonpayment to argue for loan forgiveness.<\/p>\n<h2><strong>The <\/strong>&lsquo;<strong>College Con<\/strong>&rsquo;<\/h2>\n<p>However, other elements of the CBO report show additional facets to the student loan story. For instance, nearly three-quarters (72 percent) of the loans were made to recipients of federal Pell grants, who by definition have lower incomes. One-third of loans (33 percent) went to students (both Pell recipients and non-Pell recipients) who financed only one or two years of undergraduate education. Many of these students likely did not complete even an associate&rsquo;s degree and therefore have little to no additional earning power as a result of the time they spent in college.<\/p>\n<p>Unsurprisingly, therefore, individuals who financed only one or two years of college were less likely than those who completed an undergraduate or graduate degree to make substantive repayments. People who financed only one year of undergraduate education were more than three times more likely to default on their loans (41 percent) than &ldquo;those who financed upper-level undergraduate study&rdquo; (12 percent). Borrowers who financed only one or two years of undergraduate education were more likely to owe more on their loans after six years than when they had started.<\/p>\n<p>The most telling chart from the entire CBO report dealt with degree-completion rates. Half of the federal student loans issued went to students attending schools where fewer than 46 percent of students graduated:<\/p>\n<figure><figcaption><\/figcaption><\/figure>\n<p>Think about that for a moment: More than half of all federal student loans go to students attending institutions where <em>more than half of students don<\/em>&rsquo;<em>t graduate<\/em>. Only one-quarter of students receiving loans attend institutions where 63 percent of students graduate &mdash; and even a 63 percent &ldquo;success&rdquo; rate constitutes an &ldquo;F&rdquo; in many grading systems. Unsurprisingly, the loans from institutions where more students graduate are likelier to get repaid.<\/p>\n<h2><strong>Rethinking College<\/strong><\/h2>\n<p>All these data points suggest that, yes, we do have a problem with some students gaming the system and using income-driven repayment to avoid paying back their loans. But we have an even bigger problem with the institutions that purport to &ldquo;educate&rdquo; these students yet leave more than half without degrees.<\/p>\n<p>The reasons for this dynamic are many. In some cases, students may not belong in college &mdash; or at least not directly after high school. They could benefit from vocational and technical education, or more experience and maturity, to make a more informed choice about a <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/white-house-attacks-desantis-for-blocking-high-school-course-teaching-black-queer-studies\/\" title=\"White House Attacks DeSantis For Blocking High School Course Teaching \u2018Black Queer Studies\u2019\">potential career path<\/a> before embarking on a costly education.<\/p>\n<p>In far too many cases, colleges and universities aren&rsquo;t taking responsibility for their charges. The CBO data regarding college completion makes the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/5-reasons-making-taxpayers-pay-off-student-loans-is-a-rotten-idea\/\" title=\"5 Reasons Making Taxpayers Pay Off Student Loans Is A Rotten Idea\">student loan program<\/a> look like a money grab for higher education institutions, who seem more interested in attracting students&rsquo; federal loan dollars than giving them value for money in the form of a degree they can use to increase their earning power &mdash; and repay their loans. Their efforts to improve student retention and graduation haven&rsquo;t shown results.<\/p>\n<p>The tragedy is compounded by the fact that the overwhelming majority of loans get issued to Pell grant recipients. These students got sold on a college education as the way to achieve the American Dream yet ended up bogged down with debt attending an institution that in most cases didn&rsquo;t do much to help them graduate. And Democrats&rsquo; plan to forgive their loans wouldn&rsquo;t solve the fact that many of these individuals never received a degree or marketable skills that can help them in the workplace.<\/p>\n<p>Particularly given the ideology that dominates most universities, conservatives should have zero qualms about imposing strict requirements for institutions whose students 1) don&rsquo;t graduate and 2) don&rsquo;t repay their loans. It&rsquo;s long past time for taxpayers to stop subsidizing woke indoctrination that doesn&rsquo;t make students smarter &mdash; or richer.<\/p>\n<hr>\n<p>      Chris Jacobs is founder and CEO of Juniper Research Group, a policy consulting firm based in Washington, and author of the book &#8220;<a href=\"https:\/\/www.amazon.com\/dp\/1645720020\">The Case Against Single Payer<\/a>.&#8221; He appeared in the 1995 &#8220;Jeopardy!&#8221; Teen Tournament and is on Twitter: <a href=\"http:\/\/twitter.com\/chrisjacobsHC\">@chrisjacobsHC<\/a>.<\/p>\n<\/p><\/div>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The saying goes that a picture is worth a thousand words, but in some instances, a collection of images can represent over $1 trillion. A recent report from the Congressional Budget Office (CBO) includes informative charts that highlight various issues related to the existing federally subsidized loan program. Similar to many crises stemming from government actions, the student debt dilemma has multiple contributing factors. The proposed &#8220;solution&#8221; by Democrats\u2014holding all taxpayers accountable through extensive &#8220;loan forgiveness&#8221;\u2014would likely exacerbate the situation.<\/p>\n<p>**Students Not Repaying &#8216;Loans&#8217;**<\/p>\n<p>The CBO&#8217;s analysis focused on federal student loans that began repayment between July 2009 and June 2013, tracking these loans until 2019. This timeframe followed the peak of the Great Recession and preceded the economic disruptions caused by Covid-19, which led to significant student loan relief in 2020.<\/p>\n<p>During this four-year period, there was a notable increase in borrowers opting for income-driven repayment (IDR), rising from 10% in the first year to 33% by year four. As explained by CBO, while fixed payments remain unchanged throughout repayment, IDR allows for extended repayment periods\u2014typically spanning 20 or 25 years instead of just ten\u2014with any remaining balance forgiven afterward. Some borrowers may even have \u201cpayments\u201d as low as $0 that still count toward their total payment requirement for forgiveness.<\/p>\n<p>It\u2019s not surprising that more borrowers are choosing this option as plans with lower expected payments and quicker loan forgiveness have become more popular and widely recognized. However, this shift towards IDR and minimal or zero-dollar \u201cpayments\u201d resulted in only about 38% of months seeing substantive payments\u2014defined as at least $10\u2014from an average borrower during their repayment period.<\/p>\n<p>Given that substantial repayments occurred only about one-third of the time, it\u2019s no shocker that after six years, median borrowers found their debt increased rather than decreased. While nearly 10% managed to pay off their loans entirely within four years and another 15% reduced their balances significantly over six years studied; most borrowers saw an increase in what they owed because their \u201cpayments\u201d did not cover accrued interest.<\/p>\n<p>Those utilizing income-driven repayment made fewer substantial payments overall and were much more likely to see increases in their balances; indeed, over three-quarters of IDR participants experienced growth in their loan amounts during this six-year span compared to just over half of those on fixed repayments who saw reductions.<\/p>\n<p>This data illustrates how IDR has effectively turned &#8220;loan repayment&#8221; into a farce where many are signing up for plans resulting in little or no actual payment while allowing debts to balloon further. As more individuals engage with IDR without making meaningful contributions toward paying off loans, Democrats leverage this manufactured \u201ccrisis\u201d as justification for advocating loan forgiveness.<\/p>\n<p>**The \u2018College Con\u2019**<\/p>\n<p>However, other aspects highlighted by CBO reveal additional layers within the student loan narrative. For instance, approximately three-quarters (72%) of these loans were issued to recipients of federal Pell grants who typically come from lower-income backgrounds. One-third (33%) went towards students financing only one or two years of undergraduate education; many likely did not complete even an associate degree and thus gained little additional earning potential from college attendance.<\/p>\n<p>Consequently\u2014and unsurprisingly\u2014those who financed just one or two years were less inclined than graduates at any level to make meaningful repayments on their loans; individuals funding merely one year had default rates exceeding three times those financing upper-level studies (41% versus 12%). Borrowers covering only one or two undergraduate years often ended up owing more after six years than when they started out.<\/p>\n<p>One particularly revealing chart from CBO illustrated graduation rates: half of all federal student loans went towards students enrolled at institutions where fewer than half graduated successfully:<\/p>\n<p>Consider this: More than half of federal student loans support students attending schools with graduation rates below fifty percent! Only a quarter attend institutions boasting graduation rates above sixty-three percent\u2014a figure which would be considered failing under many grading systems\u2014and unsurprisingly those attending higher-performing schools tend also repay better on average.<\/p>\n<p>**Reevaluating College**<\/p>\n<p>These statistics indicate we do face issues with certain students exploiting income-driven programs while avoiding repaying debts\u2014but we confront an even larger issue regarding educational institutions claiming responsibility yet leaving so many without degrees upon completion.<\/p>\n<p>There are numerous reasons behind such dynamics: some students may simply be ill-suited for college right after high school\u2014they might benefit instead from vocational training or gaining experience before committing financially toward higher education.<\/p>\n<p>In too many instances though colleges seem disinterested regarding accountability concerning outcomes achieved by attendees\u2014the data suggests our current system resembles nothing short but exploitation aimed solely at securing federal funds rather than providing genuine value through marketable degrees capable enough enabling graduates\u2019 financial independence necessary for repaying incurred debts.<\/p>\n<p>Tragically most issued funds target Pell grant recipients sold on pursuing higher education under false pretenses promising pathways leading directly into achieving American Dream status\u2014all too often resulting instead burdened heavily down under unmanageable debt levels due largely ineffective institutional support structures designed primarily around retention metrics rather actual learning outcomes achieved post-graduation.<\/p>\n<p>Democrats\u2019 proposals aimed solely forgiving outstanding obligations won\u2019t address underlying problems faced here since countless individuals never acquired either degrees nor skills applicable within job markets capable assisting them escape burdensome financial situations created initially via misguided choices made along educational journeys undertaken previously.<\/p>\n<p>Given prevailing ideologies dominating campuses nationwide conservatives should feel justified imposing stringent requirements upon institutions whose pupils consistently fail both graduate successfully &amp; repay borrowed sums accordingly\u2014it\u2019s high time taxpayers cease subsidizing woke indoctrination yielding neither smarter nor wealthier graduates overall! <\/p>\n<p>Chris Jacobs is founder\/CEO Juniper Research Group\u2014a policy consulting firm based Washington authoring book titled &#8220;Case Against Single Payer.&#8221; He appeared during \u201995 Jeopardy! Teen Tournament currently active Twitter @chrisjacobsHC<\/p>\n","protected":false},"author":521,"featured_media":2344701,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/09\/Harvard-Graduation-Group.jpg","fifu_image_alt":"","footnotes":""},"categories":[546],"tags":[33568,41504,14849],"class_list":["post-2344700","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-federalist","tag-financial-struggles","tag-loan-payments","tag-student-debt"],"fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/09\/Harvard-Graduation-Group.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2344700","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/521"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2344700"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2344700\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2344701"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2344700"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2344700"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2344700"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}