“Student Debt Viewpoints” is an occasional series looking at the student debt crisis — its causes and possible solutions — by speaking with different stakeholders in the issue, including government officials, students, school administrators, activists, and others. The views expressed are those of the articles’ subjects and are not necessarily those of Student Loan Hero or its parent company, LendingTree.
Political commentators say he’s a long shot, but if Democratic candidate Andrew Yang does become president, he has plenty of detailed ideas on solving the U.S. student loan crisis.
“It’s deeply immoral what we have done to young people in this country,” said Yang in regards to the unprecedented rates of student loan borrowing. “We need to make very big changes.”
In Yang’s eyes, those changes include an easier path to loan forgiveness, an easing of college tuition rates and a “universal basic income” for all Americans 18 years of age and older — proposals that have the potential to pick up support, regardless of whether Yang wins his party’s nomination.
Meet Andrew Yang
With more than 45 million Americans currently owing a collective $1.5 trillion in education debt, student loans are increasingly drawing the attention of politicians. But for Yang, the student debt crisis isn’t just another talking point: He’s experienced it firsthand, having to borrow $105,000 to pay for law school.
“I had a repayment plan of about 20 years,” said Yang, a 44-year-old native New Yorker. “My monthly payment was a little less than $1,000 per month.”
Yang’s loans posed an even bigger challenge when he realized he didn’t want to work in law, but instead try his hand in the world of entrepreneurship.
“During that time, I started a business that failed,” said Yang. “I had some tough times personally and financially.”
Fortunately, Yang turned around his luck, becoming CEO of Manhattan GMAT, part of a test prep company which was eventually acquired by Kaplan. His success led him to found Venture for America, a nonprofit with a mission to revitalize American cities and communities through entrepreneurship.
While he was able to transition from the world of law to business, Yang recognizes that student loans are a roadblock for many aspiring entrepreneurs, saying his own were a “constant pressure.”
“Business formation is at a multi-decade low, and millennials are on track to have the lowest rate of entrepreneurship of any generation in modern history,” said Yang. “Student loan debt is a big part of that.”
Andrew Yang on the student loan debt crisis
Yang believes that not only is student debt stopping millennials from founding businesses, but it’s also delaying life milestones across the generation.
“This 1.5 trillion in student loan debt is keeping people from … buying homes, starting families and doing many other things that would drive our society forward,” he said. “Instead you have millions of Americans who are living at home and servicing their debt, which does not help anybody except the financial companies.”
So why has the student loan crisis grown to such massive proportions? One cause, Yang said, is the skyrocketing cost of college.
“College has gotten 250% more expensive in the last 25 years, and the quality has not changed in the same way,” said Yang. “[Colleges] have become administratively bloated and excessively bureaucratic.”
Along with rising costs, Yang points to the pressure put on students to go directly into college after high school.
“College is being oversold to young people as the only path forward,” said Yang. “Many people heading to college feel like it’s the only thing to do, but it might not have been the right choice for them.”
In Yang’s eyes, this system has damaged the finances of American families more than it has advanced them.
“It’s immoral to have families mortgaging their future because they feel like they don’t have any choice but to send their kids to college,” he said.
“The colleges have gotten away with passing along these immense cost increases, and then families have felt like they needed to borrow unsustainable amounts, and the government has been providing those loans,” Yang said.
Proposals and solutions
So what can be done about rising tuition costs and the climbing rate of student loan borrowing? Yang proposes the following actions:
The 10×10 Student Loan Emancipation Act
Yang believes in more flexible student loan forgiveness to liberate borrowers from their debt burdens. To that end, he would propose the 10×10 Student Loan Emancipation Act, a plan that would allow students to pledge 10% of their salary for 10 years, at which point their remaining student loan balance would be forgiven.
Currently, income-driven repayment plans offer loan forgiveness after 20 or 25 years, so this plan would move the timeline up significantly. And unlike the Public Service Loan Forgiveness program which offers forgiveness after 10 years of working in public service, it wouldn’t impose any specific employment requirements.
“Right now there are so many people that don’t have a realistic light at the end of the tunnel,” said Yang. “They’re looking at being in debt for literally decades and are giving up hope that they’ll ever be able to repay it.”
Not only would this 10×10 plan provide that light, Yang said, but it would stimulate the economy.
“Virtually every dollar [of debt] you take off someone’s back would have immense social return because those people would be spending more money directly in their communities and in the local economy instead of sending that money off to service a debt load for a degree they got years ago,” said Yang.
Reduce the inflated cost of college
As for reducing the cost of college, Yang suggested that the federal government incentivize schools to lower their administrator-to-student ratio and reduce tuition costs as a result.
“I would tie access to federal government loans to colleges getting their costs per student down and their admin-to-student ratio down and closer to levels that it was in previous decades,” he said.
At the same time, Yang vowed to ensure that the government doesn’t profit from student loan debt.
“Right now it’s actually something of a moneymaker for the government, which doesn’t make sense given that this is meant to be a service to us, the citizens of this country,” said Yang. “Profiting off the banks of citizens’ indebtedness is not a business the government should be in.”
Invest in vocational and trade programs
Along with embracing structural reforms to the reduce the cost of education, Yang would encourage investment in vocational programs, especially at the high school level.
America needs to “invest in making trade schools, vocational schools, and apprenticeship programs much more prevalent in high schools,” he said, adding that some trades also offer a buffer against the trend toward automation.
“Jobs like air-conditioning repair or being a plumber are very, very hard to automate,” he said. “Some of the jobs that are being done by college students right now are more subject to automation.”
Allow personal bankruptcy discharge of student loans
In the past, student loan borrowers could discharge student loans through personal bankruptcy. But in the late 1990s, Congress removed this protection for federal loans — unless debtors could prove an extreme, undue hardship — and in 2005, it imposed the same requirement for private student loans.
Yang believes this change was unfair to student loan borrowers, and he would reintroduce the old rules if given the chance.
“I would make it so that you can discharge educational loans through personal bankruptcy,” he said, noting that the current system makes student loan discharge extraordinarily rare.
Yang said lobbyists “invented a crisis. It’s not like there were droves of people declaring bankruptcy and discharging student loans in that way. It was a response to something that wasn’t even a problem.”
Distribute a universal basic income
A core tenet of Yang’s campaign — and among its more controversial positions — is the idea of a universal basic income, or a guaranteed distribution of $1,000 per month to every U.S. citizen over the age of 18.
Among other benefits, Yang believes a universal basic income would protect American workers from automation, which his campaign website says will threaten the jobs of one-third of all working Americans in the next 12 years.
This $1,000 per month would help people transition to new careers, Yang said, and it would be a boon for students and student loan borrowers, too.
Universal basic income “would have the function of partially paying anyone’s tuition who is attending college,” he said. “[It] would certainly help with people’s student loan debt, even independent of forgiveness and other programs.”
Solving the problems of inflated tuition and student loan borrowing
Yang believes the student loan crisis is not going away on its own, and we need to solve the problems that created this debt burden in the first place.
“If anyone thinks the level of student loan debt was immoral and immorally generated, and as a country we should get together and wipe a lot of it out and free up of our young people, then I may be your candidate,” said Yang. “I have a clear idea of right and wrong, and a lot of this stuff is just wrong.”
From more flexible forgiveness programs to structural reform among colleges and universities, Yang sees the need for “very big changes.”
“We shouldn’t let our moral imaginations be limited by what certain others might think are impossible,” said Yang. “We need to remember that great things are still possible in this country.”
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.15%1||Undergrad & Graduate|
|1.99% – 5.64%2||Undergrad & Graduate|
|3.80% – 9.36%3||Undergrad & Graduate|
|1.91% – 5.25%4||Undergrad & Graduate|
|2.25% – 6.53%5||Undergrad & Graduate|
|2.15% – 4.42%6||Undergrad & Graduate|
|1.89% – 5.90%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.00% – 5.63%8||Undergrad & Graduate|
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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 May 1, 2021.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for CommonBond.
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 LendKey.
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 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
5 Important Disclosures for SoFi.
6 Important Disclosures for PenFed.
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 2.15%-4.42% 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.
7 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.
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.
8 Important Disclosures for Nelnet.
Checking your rate results in a soft credit pull, which will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score.
Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.
Request for the cosigner to be released can be made by the borrower after 24 consecutive, on-time payments (not later than 15 days after the due date) of principal and interest have been made. Borrowers in deferment or forbearance must make 24 consecutive, on-time payments after re-entering repayment to qualify for the release. The borrower must be current on their payments at the time of the cosigner release request and show the ability to assume full responsibility of the loan(s) by meeting certain credit criteria on their own at the time of the request, including, but not limited to, being a U.S. citizen or having permanent residency in the United States, being the age of majority in their permanent state of residency, providing sufficient proof of income, and having no student loans in default.
Hardship forbearance allows you to temporarily suspend payments on your loan(s) while you are experiencing financial hardship. It is offered in increments of two or three months, with a maximum of 12 months available, in aggregate, over the life of the loan. If your loan(s) are in good standing at the time of your request, you will be eligible for forbearance in increments of two monthly payments. If, at the time of your initial request, your loan(s) are considered past-due, you will be eligible for forbearance in increments of three monthly payments. Future increments of forbearance, up to a life-time maximum of 12 months, may be requested upon the completion of making a certain number of principal and interest payments. During the two- or three-month forbearance period, you will not be required to make payments; however, any unpaid interest will continue to accrue and will be capitalized (added) onto your principal balance at the end of the forbearance period. You may continue making payments in any amount without penalty during the forbearance period. Your loan repayment term will be extended by the number of months in the forbearance period.
Refinance Loan Eligibility: You must be a U.S. citizen or permanent resident alien with a valid U.S. Social Security number, and be the legal age to enter into binding contracts in your permanent state/territory of residency, or be at least 17 years of age and apply with a cosigner who is at least the age of majority in their state/territory. Non-residents can apply with an eligible cosigner who is a U.S. citizen or permanent resident alien with a valid U.S. Social Security number. The student loans you refinance must be in their grace or repayment period, and you can no longer be enrolled in school on a half-time or more basis. You must have at least $5,000 in student loans to refinance. You, or your eligible cosigner, must have an annual income of at least $36,000. Approval subject to credit review. Other credit criteria may apply.
Refinance Loan Limits:
Loan Refinancing Risks: Federal student loans include benefits that may not be offered with private student loans. Carefully review any potential benefits that may be lost by refinancing federal and private education loans, such as the loss of any remaining grace periods. To learn more about what to take into consideration when refinancing federal student loans with private education loans, click here
Selecting ‘Get Started’ results in a soft credit pull, which will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score.
Fixed interest rates range from 2.99% APR (with auto debit discount) to 6.25% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. The fixed interest rate will remain the same for the life of the loan.
Variable interest rates range from 2.00% APR (with auto debit discount) to 5.63% APR (without auto debit discount). Your interest rate will depend on your (and if applicable, your cosigner’s) credit qualifications. Variable rates may increase after consummation. The variable interest rate is equal to the One-Month London Interbank Offered Rate (“One-Month LIBOR”) plus a margin. The One-Month LIBOR in effect for each monthly period (from the first day of the month through and including the last day of the same month) will be the highest One-Month LIBOR published in The Wall Street Journal “Money Rates” table on the twenty-fifth (25th) day (or if such day is not a business day, the next business day thereafter) of the month immediately preceding such calendar month. The Annual Percentage Rate (APR) for a variable interest rate loan will change monthly on the first day of each month if the One-Month LIBOR index changes. This may result in higher monthly payments. The current One-Month LIBOR index is 0.15% as of 5/4/2021.
The lowest interest rate for each loan type requires automatically withdrawn (“auto debit”) payments, a five-year repayment term, and the borrower making immediate principal and interest payments. Not all borrowers will receive the lowest rate. The interest rate and Annual Percentage Rate (APR) may be higher depending upon (1) the credit history of the borrower and, if applicable, the cosigner, (2) the repayment option and loan term selected, (3) the loan type selected, and (4) the highest level of education attained. If approved, applicants will be notified of the rate qualified for within the stated range.
*Checking your rate results in a soft credit pull, which will not affect your credit score. If you continue with your application, Nelnet Bank will request your permission to obtain your full credit report from one or more consumer reporting agencies. This is a hard credit pull and may affect your credit score. **Your actual savings may vary based on interest rates, outstanding balances, remaining repayment terms, and other factors.