Few borrowers forgiven through income-based repayment: RPT
Yahoo Finance’s Aarthi Swaminathan joined Yahoo Finance Live to find out how few student loan borrowers have achieved forgiveness through income-based repayments, according to a recent report.
JEN ROGERS: So why did it not work? Because it seems like such a simple idea. You pay a long time, and then it’s done. And only 32 people actually got forgiveness? It is actually mind boggling that the number is so small.
AARTHI SWAMINATHAN: Yeah, that was a surprisingly shocking report, right? 32 out of two million people. I mean, this is something the government has offered to everyone. [INAUDIBLE] 20 years. They have another review called Public Service Loan Forgiveness, which also has a very ridiculously low approval rating.
It just boils down to two things. The first is that borrowers don’t know how to deal with the paperwork. Imagine doing the paperwork over and over again every year. You know, there haven’t been a number of startups trying to help bridge that, I guess you’d call that resistance.
But at the same time, the services, for years, haven’t … well, but these advocates say the services haven’t done a good enough job of guiding borrowers through this. So there have been multiple failures at several levels that have caused this crisis. And that’s why a lot of people are saying, why not just wipe the slate clean and come up with a new system? So the more you look at what’s going on in the student loan mechanism, you think to yourself, oh my gosh, is this really happening?
ADAM SHAPIRO: It’s – you know, oh my gosh, does this really happen, but the public, I think the vast majority of polls show, is not in favor of a full-scale forgiveness. Does this contribute to the kind of Byzantine bureaucracy that we are getting that only led to 32 people getting pardoned?
AARTHI SWAMINATHAN: It’s interesting. A lot of people don’t support – yes, a lot of people write to me and say, I don’t support forgiveness because I paid off my student loans. But the Byzantine, that aspect – and I’m glad you picked up that word – is because the government was not transparent with the portfolio. He did not introduce the reform quickly enough. Biden has proposed reform, but it’s just not happening fast enough. And borrowers just don’t know what to do.
And that’s just an interesting problem to solve. We might have a new FSA director soon, so we’ll see what he does or what they do. But it’s such an operationally complex thing. So it will take a long time to resolve, it seems.
ADAM SHAPIRO: Aarthi Swaminathan is one of our reporters here at Yahoo Finance covering education and the student loan debt crisis. Thank you very much, Aarthi.