(WGN) – As the nation’s student loan balance hovers around $ 1.7 trillion, the struggles seem endless.
One in 4 Americans has college loan debt. While many of them are working to pay off loans, most are still financially underwater years or even decades later. Laura Allen of Chicago is one of many who still have outstanding college bills as she nears retirement.
Graduated from college in 1992, the married mother of three graduated from Louis National University. But that achievement came with a $ 12,000 loan that soared to over $ 30,000.
Allen is now almost 60 years old.
“I actually added up my payments one day, and I almost felt like crying because I paid off over $ 12,000 on my student loans,” Allen said.
Postponements and tolerance played a role, but she says she always paid the minimum. Yet she still couldn’t get out of her student loan debt. Allen says she feels angry, hopeless and frustrated.
“I can’t be the only one in this situation, and I know even a loan shark would negotiate,” she said.
Personal finance expert Terry Savage says the sad reality is student lenders won’t negotiate.
“Student loans are the motel of finance,” she said. “You come in and you’re trapped. “
His idea of exterminating the problem is simple.
“Cut the rate to about what the government pays, 1%, then ask people to pay only the principal,” she said. “A lot of people like Laura have already paid off the principal. That’s the right track. Withdrawing excess loan shark interest. Let people pay off the initial loans.
In 2020, then-Democratic presidential candidate Joe Biden promised, if elected, to help cash-strapped students by forgiving them $ 10,000 in loans. Now Senate Majority Leader Chuck Schumer and Democratic Senator Elizabeth Warren want to see the student loan burden reduced by $ 50,000.
As Biden feels the pressure, Savage believes Congress needs to come up with a better solution, while taking into account those who have made their loan payments over the years.
“So unfair to the people who have already paid off their loans, who made a big dent on them, or parents who saved up and skimped,” Savage said.
For cases like Allen, a few years away from retirement, Savage says the government has other plans for his social security.
“If you don’t pay off your student loans by the time it’s time to collect your Social Security, they will, yes, foreclose your Social Security benefits,” she said. “In fact, it has already happened to over 115,000 retirees.
It’s Allen’s worst fear.
“We cannot destroy the entire lives of retired people after they have paid off the principal on their loan,” Savage said. “It’s time to adapt.
The philosophy applies to aging students, as well as parents and grandparents who have helped their children and grandchildren with student loans. Before the pandemic, in the second quarter of 2019, just over half, 56%, of outstanding federal student debt was actively being paid off. Everyone was in default or some sort of restraint or abstention.
Another analysis concludes that women hold two-thirds of all student debt in the United States. Plus, 20 years after starting college, the median black borrower owes 95% of their student debt, compared to just 6% for the median white borrower.
Despite the financial crisis, Allen relies on Congress to throw him a life jacket.
“My hope is that I can do something with Congress because I just can’t pay $ 30,000 back,” she said. ” I can not. “