I'm sure President Obama will reach that goal. About 4.8 million people are in IBRPs now, up from just 3.9 million last summer. It is virtually certain that 7 million people will be 20-year or 25-year repayment plans by the end of 2017.
But this is insane! Putting people in long-term income-based repayment plans basically makes them sharecroppers, forcing them to pay a percentage of their income to the government over the majority of their working lives.
Many people in IBRPs didn't even complete the education programs that dragged them into debt. How can that be good for our economy--to have millions of people making monthly payments for two decades or more for educational experiences that are worthless to them?
And let's not forget that most people don't sign up for these long-term repayment plans immediately after they finish their studies. Generally, they initially try to make loan payments under the standard 10-year repayment plan. It is only when they fall behind on their payments or default that they sign up for an IBRP.
Brenda Butler, who recently lost a court battle to discharge her student loans in bankruptcy, is a case in point. Butler graduated from Chapman University in 1995 and tried to keep current on her student loans for almost 20 years. Eventually, she signed up for a 25-year repayment plan and filed for bankruptcy. Although the judge ruled that Butler had acted in good faith, she denied Butler a discharge. Butler is now in a 25-year repayment plan that will not be completed until 2037--42 years after Butler graduated from college!
President Obama and Secretary of Education John King tout IBRPs as beneficial to college-loan borrowers. As Secretary King put it in a conference call to reporters, "The goal is to get all of the folks who would benefit from income-based repayment into one of the plans that make sense for them."
But of course, these long-term repayment plans are nothing more than a cynical scheme by our government to sweep the student-loan catastrophe under the rug. Virtually everyone in these plans is making payments that are so low that the payments don't cover accruing interest. In other words, most people in these plans will be seeing their loan balances go up, not down, as the years go by.
In short, most people in IBRPs are not paying down their student loans at all; they're basically just paying a 20-year penalty for making poor educational choices when they were young. For all practical purposes, people in IBRPs--soon to be 7 million people--have defaulted on their loans; and we can add that 7 million to the 10 million who officially defaulted or are delinquent in their loan payments.
So if you borrowed too much money to go to college and didn't find a good job, this is your likely future: You will eventually join an IRBP and become a sharecropper.
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| Sharecroppers |
References
Josh Mitchell. White House to Push Student Borrowers to Get Into Debt-Relief Plans. Wall Street Journal, Apri 28, 2016. Accessible at http://www.wsj.com/articles/white-house-to-pushes-student-borrowers-to-get-into-debt-relief-plans-1461816062
Michael Stratford. Obama Admin Sets New Income-Based Repayment Goal. Inside Higher Ed, April 28, 2016. https://www.insidehighered.com/quicktakes/2016/04/28/obama-admin-sets-new-income-based-repayment-goal?utm_source=Inside+Higher+Ed&utm_campaign=c63d1912bd-DNU20160428&utm_medium=email&utm_term=0_1fcbc04421-c63d1912bd-198565653
U.S. Department of Education. Income-Driven Repayment plan Enrollment Jumps, Delinquency Rates Drop in New Student Loan Data, August 20, 2015. Accessible at http://www.ed.gov/news/press-releases/income-driven-repayment-plan-enrollment-jumps-delinquency-rates-drop-new-student-loan-data
Why Student Debtors Go Unrescued. New York Times, October 7, 2015. Accessible at http://www.nytimes.com/2015/10/07/opinion/why-student-debtors-go-unrescued.html?_r=0
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