What Borrowers Who’ve Already Repaid Their Debt Say About Mass Forgiveness

 August 29, 2019
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For many, mass debt forgiveness is the silver bullet to slay America’s student loan crisis. For others, a bailout is far from the best way to deal with education debt.

Whichever side you fall on, it seems that mass student loan debt forgiveness is at the forefront of the debate surrounding America’s student loan problem. Presidential candidates like Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have set forgiveness proposals as one of the centerpieces of their campaigns, and editorial boards around the country are firing off opinions. Be prepared to hear more of them.

Where does the voting (and borrowing) public stand? That depends on who you listen to. For example, about 56% showed support Sen. Warren’s proposal for some $640 billion needs-based forgiveness, with 27% opposed, according to a Politico/Morning Consult poll from May. However, 52% of respondents to a separate Quinnipiac University survey said they’d oppose a federal loan forgiveness plan if it were financed by taxing the wealthy, as Warren’s plan is.

Without trying to decide who’s right or wrong, let’s relay the arguments for and against such widespread loan forgiveness. They could help as you consider your own opinion on this question.

1. For: Help fellow borrowers in need

The most basic argument supporting forgiveness is a human one — it’s as simple as offering a helping hand to those who need it.

Borrowers who enjoyed good fortune during their repayment are especially likely to wonder: If the federal government could make lives better for still-indebted student loan borrowers, why not?

Our informal Twitter poll collected such responses from borrowers who zeroed their loan balances without any public assistance. Here are responses from three of the many Twitter handles advocating mass student loan relief:

  • Amanda Page (@amandadashpage): “I support it because I think giving people that relief will free up a lot of creative brainpower currently held hostage in the anxiety people feel over their loans. I had that anxiety for years before I did a drastic project and paid them off quickly.”
  • Lyla Peter (@PeterPlansIt): “Totally support. Once my debts were paid off, I had a marked increase in my [quality of life], which I then used to invest in [the] economy in different ways.”
  • Traci B. Fly (@tbfly): “I feel blessed to have been able to pay mine off but recognize that everyone is not as fortunate. A lot of us, including myself, were unaware of all the repercussions when we signed up for this debt in our late teens, early twenties. I don’t mind [others] getting a clean slate.”

2. Against: Many borrowers aren’t actually in need

On this side of the argument, you might point to the fact that America’s $1.6 trillion student loan debt reached its peak, in part, because some borrowers took out six figures for expensive graduate and professional degrees.

Why forgive the balances of a bunch of lawyers and doctors, the thinking goes, since these are the sort of professionals with the earning power to repay their debt without assistance?

While Sanders’ proposal offers forgiveness for all, Warren’s offers decreasing amounts of relief to borrowers with increasing amounts of income. No borrower making more than $250,000 a year, for example, would receive anything from Uncle Sam.

Still, Adam Looney of the Brookings Institution estimated that Warren’s policy would disproportionately benefit those with a second or third degree: “Borrowers with advanced degrees represent 27% of borrowers but would claim 37% of the annual benefit.”

3. For: Give borrowers a break in this up-and-down economy

For many student loan borrowers in the wake of the Great Recession, finding appealing work, let alone in the field of their college major, was a huge challenge.

Some felt they were forced to borrow to afford a prestigious school, hoping it would lead them to a stellar career. Others might have borrowed loans unwittingly in the first place, confused by the jargon of Direct Subsidized and Unsubsidized Loans and all the rest.

Forgiving all borrowers, it could be said, would help them focus on furthering their career and progressing toward other financial goals.

And it might improve the economy too — a 2018 report from Bard College projected mass student loan forgiveness would increase gross domestic product and decrease unemployment.

4. Against: You’re obligated to repay what you borrow

Macroeconomic factors have affected borrowers since the beginning of student loans, some argue, so why start using that as an excuse now?

A Twitter respondent with the handle John Holloway takes this stance, saying that despite the student loan strife he himself experienced, he still wouldn’t support mass forgiveness if it reached the ballot box.

“I knew it was a loan, even at age 19!” he said in reply to Student Loan Hero’s query. “I knew it had to be paid back.”

Matthew Burr, who repaid $74,000 worth of student loans, expresses similar concerns about whether it’s fair for the government to fund such as program.

“I look at it like this: Is it my grandmother or other family members’ responsibility to pay my debt through the taxes they pay? Not a chance,” he said. “So it isn’t my responsibility to [help] pay down or eliminate all student loan debt.”

That’s where you might consider the costs of broad forgiveness programs. Warren says her program would be funded via a 2% tax on 75,000 families with at least $50 million in the bank, while Sanders would pay for his broader forgiveness proposal through taxes on stock and bond transactions.

5. Against: Mass forgiveness sets a dangerous precedent

Maybe you wondered why some companies were bailed out over others during the financial collapse of 2008-09. There was a lot of talk about picking winners and losers, as well as whether the bailouts created “moral hazard,” encouraging banks to continue with their risky behavior.

Those arguing against a consumer bailout this time around aren’t solely concerned with which, if any, borrowers would receive relief. They’re also worried about the precedent it would set for future borrowers. Should they also expect forgiveness when they graduate?

Current borrowers who receive forgiveness might also suddenly think that other financial woes could be cured by a congressional vote or an elected official’s signature.

“What would be next — forgiving mortgages?” asked borrower Bill Fish, who reported covering his $18,000 student loan debt before helping his wife attack hers. “I’d rather have the government look at the rapidly [rising] cost of higher education.”

The gray area of mass student loan debt forgiveness proposals

Painting mass student loan debt forgiveness as a black-and-white issue doesn’t do it justice. The gray area is miles wide — just consider the suggestions of Warren and Sanders.

The Massachusetts senator promised to void debt proportionally based on borrowers’ income, costing the federal government a cool $640 billion. The Vermont senator, meanwhile, took his pledge a step further, calling for cancellation for all, which could reportedly run up to $2.2 trillion, which could cover the current student debt statistic of about $1.6 trillion.

Dissenting voices point out that forgiveness might not address the sources of the crisis, which include a swelling cost of attendance and a federal student aid system due for an overhaul. (This is why some presidential candidates have also talked about various forms of free college.)

Borrowers on both sides of the debate call for greater investment in financial literacy programs so that students understand their debt obligation. Others also favor a rewriting of the bankruptcy code, giving bankrupt borrowers the chance to get rid of their student debt.

As for forgiveness itself, there’s also the matter of whether it’s even feasible to carry out. Some student loan lawyers see passing such a program and implementing it is unlikely if not impossible.

Pursue targeted student loan forgiveness that already exists

If you’re a student loan borrower in the shadow of this spotlight issue, you might be tempted to pin your hopes on one day receiving a loan discharge. Unfortunately, it could be a long wait.

Instead, consider student loan forgiveness that already exists, including programs for federal education debt:

  • Public Service Loan Forgiveness: Wipe your balance clean after 10 years of timely payments while working full-time for an eligible employer, such as the government or a nonprofit.
  • Forgiveness via income-driven repayment (IDR): Receive a blank slate after 20 or 25 years of prompt payments on an IDR plan.

You might also be able to find forgiveness programs — or loan repayment assistance — for federal and private loan debt. Aid is available from states and employers, depending on where you live and what you do for work.

Investigate the available options — that beats waiting around for news that may or may not arrive at a later date.

Interested in refinancing student loans?

Here are the top 9 lenders of 2021!
LenderVariable APREligible Degrees 
1.88% – 6.15%1Undergrad
& Graduate

Visit Splash

1.88% – 5.64%2Undergrad
& Graduate

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2.50% – 6.85%3Undergrad
& Graduate

Visit CommonBond

1.89% – 5.90%4Undergrad
& Graduate

Visit Laurel Road

1.99% – 6.59%5Undergrad
& Graduate

Visit SoFi

1.88% – 5.64%6Undergrad
& Graduate

Visit NaviRefi

1.90% – 5.25%7Undergrad
& Graduate

Visit Lendkey

2.39% – 6.01%Undergrad
& Graduate

Visit Elfi

2.13% – 5.25%8Undergrad
& Graduate

Visit PenFed

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1 Important Disclosures for Splash Financial.

Splash Financial Disclosures

Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount

The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.

To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.


2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Interest Rate Disclosure

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.48% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.

Auto Pay Discount Disclosure

You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.

Student Loan Refinancing Loan Cost Examples

These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.

Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.

One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.

© 2021 Earnest LLC. All rights reserved.


3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. ‍All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for Laurel Road.

Laurel Road Disclosures

All credit products are subject to credit approval.

Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.

As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.

  1. Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
  2. Savings vary based on rate and term of your existing and refinanced loan(s). Refinancing to a longer term may lower your monthly payments, but may also increase the total interest paid over the life of the loan. Refinancing to a shorter term may increase your monthly payments, but may lower the total interest paid over the life of the loan. Review your loan documentation for total cost of your refinanced loan.
  3. After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship. During any period of forbearance interest will continue to accrue. At the end of the forbearance period, any unpaid accrued interest will be capitalized and be added to the remaining principle amount of the loan.
  4. Automatic Payment (“AutoPay”) Discount: if the borrower chooses to make monthly payments automatically from a bank account, the interest rate will decrease by 0.25% and will increase back if the borrower stops making (or we stop accepting) monthly payments automatically from the borrower’s bank account. The 0.25% AutoPay discount will not reduce the monthly payment; instead, the discount is applied to the principal to help pay the loan down faster.

Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.

Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.

Interest Rate: A simple annual rate that is applied to an unpaid balance.

Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.

KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.

This information is current as of April 29, 2021. Information and rates are subject to change without notice.
 


5 Important Disclosures for SoFi.

SoFi Disclosures

Fixed rates from 2.49% APR to 6.94% APR (with autopay). Variable rates from 1.99% APR to 6.59% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.


6 Important Disclosures for Navient.

Navient Disclosures

1. NaviRefi loans are made by Earnest Operations LLC, a member of the Navient family of companies, subject to individual approval and underwriting criteria. California residents only: Loans made or arranged pursuant to a California Finance Lenders Law license. Additional terms and conditions apply.

– To qualify, you must be a U.S. citizen or non-citizen permanent resident of the United States, reside in a state we lend in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.navirefi.com/help-and-questions. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Loan terms are subject to eligibility. Approval and interest rate depend on the review of a complete application. Loan approval is subject to confirmation that your debt-to-income, free cash flow, credit history and application information meet the minimum requirements. You must have a minimum FICO score to be considered.

– You can choose between fixed and variable rates. Fixed interest rates are 2.75% – 6.04% APR (2.50% – 5.79% APR with Auto Pay discount). Starting variable interest rates are 2.13% – 5.89% APR (1.88% – 5.64% APR with Auto Pay discount). Variable rates are based on an index, the 30-day Average Secured Overnight Financing Rate (SOFR) plus a margin. Variable rates are reset monthly based on the fluctuation of the index. We do not currently offer variable rate loans in AK, CO, CT, HI, IL, KY, MA, MN, MS, NH, OH, OK, SC, TN, TX, and VA.

– You can take advantage of the 0.25% Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. NaviRefi rate ranges are current as of June 1, 2021 and are subject to change based on market conditions and borrower eligibility.

– Loan cost examples: These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,250. Your actual repayment terms may vary.

– The information provided on this page is updated as of 06/1/2021. Earnest Operations LLC reserves the right to modify or discontinue (in whole or in part) this loan program and its associated services and benefits at any time without notice. Check www.navirefi.com for the most up-to-date information. Terms and Conditions apply. Call 855-284-4893 for more information on our student loan refinance product.

– Earnest Operations LLC – NMLS #1204917, CA CFL #6054788 – 535 Mission St., Suite 1663, San Francisco, CA 94105.
Navient Solutions, LLC – NMLS #212430 – 123 Justison St., Wilmington, DE 19801. Visit https://navirefi.com/lending-licenses for a full list of licensed states.


7 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it  endorse,  any educational institution.

Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of  5 years and is reserved for applicants with FICO scores of at least 810.

As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.


8 Important Disclosures for PenFed.

PenFed Disclosures

Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.

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