In December 2019, my husband submitted his final student loan payment. From the time we got married and started attacking those student loans as a team, it took us 18 months to pay off $51,234.51. Of this debt, $34,134.51 was federal loans and $17,100 was private. There’s not a part of me that blames the millions of Americans who are about to receive $10,000 to $20,000 in student loan relief.
I’ve paid off student loans, but I support help for those who can’t
From the outside, it looks like my husband and I “got off the hook” to pay off that debt and heck, if we did, all student borrowers should too. But that’s just not a practical, kind, empathetic, or, frankly, reasonable answer.
When it comes to the “bootstraps” story, it’s important to recognize that my husband and I were collectively earning in the six figures and had no other debt besides his student loans. Granted, we live in one of the most expensive cities in the country, but during this time we still had enough flexibility in our budget to aggressively pay off student loans and live our lives. There was no rice or beans. We still took vacations, went out to dinner, invested in our retirement plans, and had a healthy emergency savings account.
However, this strategy of accelerated earning while balancing a well-balanced life would not have been possible without getting married. Well, that’s not entirely true – I could have helped pay off his debt as an unmarried couple, but I didn’t and I’m not advising anyone to do so. My husband could not have afforded such an aggressive repayment strategy, even living a modest life, on his salary alone, which included overtime. In fact, getting married had a negative impact on her monthly payments.
My husband, like many others with federal student loans, followed an income-based repayment plan, which caps your monthly payments based on a percentage of your discretionary income. This means that those who do not earn a high salary but have large loans will have an affordable payment relative to their income. However, filing a joint tax return meant that my income was factored into the calculation and his minimum monthly payment had increased significantly.
We made the decision to aggressively repay student loans based on what was in our best interests as a family and our sanity. Wiping off his private loan made mathematical sense, but giving up federal student loan debt at a rapid pace didn’t make much sense on paper, especially since my husband was eligible for two different forgiveness programs through his work as a student. ‘teacher. Forgiveness programs, depending on the type, eliminate some or all of the remaining federal student loans after a certain number of services.
If we had chosen not to repay his federal loans aggressively, we could have paid down debt slowly on his income-driven repayment plan, and then we ended up enjoying 2 and a half years of a break on payments during the pandemic that would still have counted towards his pardon eligibility. That would have been thousands of dollars back in our bank account with a credit for the remaining balance canceled – plus the $10,000 relief.
But for me, there are no regrets.
We decided not to pursue forgiveness programs given the restrictions that would have kept my husband’s career in a particular type of waiting pattern for five years to a decade, depending on the program. For example, the civil service forgiveness program requires you to work for a government or non-profit organization for a decade before your loans can be forgiven. This means that if you have the ability or desire to enter the private sector before the end of your ten-year commitment, you will forfeit the ability to have your federal loans forgiven. This is a significant request that could have long-term consequences for someone’s career and potential earnings.
Then, at the start of the pandemic, my income started to hit rock bottom, and it was a huge relief to be at least debt-free at a time when everything seemed so unstable. Once the income issues passed and financial stability returned, I still felt grateful that we were able to get rid of debt anxiety.
Listen, I know some may still have problems – and my anecdotal story probably won’t change your mind – but this is a nuanced problem with no perfect solution. The decision to provide one-time lump-sum relief may be a flawed option, but it will provide a much-needed financial lifeline for many Americans, some of whom did not fully understand the consequences of taking out tens of thousands of dollars in student loans.
Historically, little or no meaningful education was provided to student borrowers. It was simple for people to access thousands of dollars in loans and not fully understand how much interest would accrue or even the true likelihood of gainful employment upon graduation. You could have made an informed decision based on the data and your employment situation might not have resulted in the salary you needed to stay on top of your student loans.
It’s easy to put a 2022 target on this, but I signed up in 2007 – before the financial crisis – and I’m in the middle of millennials. How many millennial seniors were sold a bill about career opportunities and the need for college only to end up being part of the mass layoffs and bottoming job market during the Great Recession? Then, when they finally started to feel some level of respite and financial stability, they were hit in the mouth by the pandemic.
Of course, there is plenty of information and resources available for someone to be proactive and do their own research. But we have to be realistic about whether the average 18-year-old makes rational, practical decisions rather than emotional ones. Even parents can push to go to the most prestigious school, no matter the cost. It’s also frustrating how many people point to “useless degrees” and “fancy schools” as if they’re the only graduates who will get help. It’s not just liberal arts majors who struggle with the burden of student loans. It is also irrational to expect everyone to be a STEM major.
For many, the concern is who will bear the financial burden of this student loan relief. Will it be the average taxpayer who did it to pay off student loans or never even accepted them? It’s unclear right now, and it’s understandable that people are concerned about their own wallets being hit to help someone else. However, there are many ways in which people’s taxes support systems where they receive little or no personal benefit, but help the community at large.
It’s always been strange to me how a contingent of people feel determined to make those who come behind them struggle in exactly the same way. We all know that life isn’t fair, and some of us will have breaks at certain times in our lives or receive moments of luck that others simply won’t. But it’s a strange phenomenon to want people to struggle just because you had to too. It is also a mistake that the next generation even has the opportunity to follow in the footsteps of its predecessors.
Will there be some of the relieved people who maybe could work harder? Sure. But will millions of Americans have a lifeline who have worked overtime or multiple jobs or had unfortunate situations that cost money? Certainly. Just because some people haven’t “deserved” relief from your personal metric doesn’t mean the many hard-working, struggling people shouldn’t get help.
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Erin Lowry is a Bloomberg Opinion columnist covering personal finance. She is the author of the three-part “Broke Millennial” series.
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