We all agree that student loan forgiveness is more than likely unattainable. Loans were a decision that was made and must be paid back. However, interest has gone up to 12%. For those faithfully paying student loans down, the amount of interest they have to pay has not changed at all. There should be caps on student loan interest so the next generation has a chance to not be in debt their entire life.
Caps should allow interest to be no more than 5% of the loan total.
Another consideration id that FAFSA should not necessarily take into account the income of parents when approving student loans since it is typically the student that will end up paying for the loan.
This is a great idea. I mentor graduate students. They all understand that they took the loans. Some really did not understand capitalization. I have often thought that it is the interest capitalization that is ballooning loans to unmanageable amounts. I would like to see existing loans recast without the capitalized interest. moving forward with no more than 2% interest. capitalization should not occur during education or deferments due to unemployment or illness.
For the next generation, you should have to qualify for loans just like any other loan. There should be a reasonable expectation of a job that will allow you to pay the loan back within 10 yrs for undergrad and 20 yrs for graduate leval degrees. No one should be able to get themselves into massive debt just to have the “college experience,” or get a degree in something like gender studies. Those days might be over.
I think it should be 1-2%. The whole goal was borrowing from future earnings, with the idea that a higher education means higher earning potential. This needs to be retroactive, those that have paid their loans with full interest should be tax credited for the interest that they were not allowed to use as a tax deduction.