Have Student Loan Borrowers Been Set Up For Failure?
Student loan payments were paused due to COVID from March 2020 to January 2022. A period of two years is long enough for the borrowers to get comfortable spending their student loan payments on other things.
In other words, these borrowers will find making future student loan payments difficult due to spending habits they created during the COVID pause.
“I can’t afford to pay my student loan because I just got back from the Bahamas!”
Actual message left on Champion’s voice mail by a panicked student.
Most borrowers don’t believe in the tooth fairy, but many are banking on the hype around “student loan debt forgiveness,” which is unrealistic because:
- Student loan debt is over $1.7 trillion.
- The entire requested budget for the 2021 “domestic discretionary budget” is $1.485 trillion. The entire discretionary budget is less than the student loan debt.
- The 2021 requested budget for education is $66.6 billion, or 4.4% of the domestic discretionary budget, for kindergarten through college and does not include funding to forgive student loans.
- The ONLY way to pay off all student loan debt is to tax every American. If you tax corporations, those costs will trickle down to American consumers.
- Those who made significant sacrifices to pay their student loans themselves will feel cheated.
- The President does not have the authority to forgive student loan debt—it can only be approved through an act of Congress.
- Since 2009, when private lenders were eliminated from the federal student loan program, 100% of ALL interest charged on student loans is profit to the government, and that money goes into the “general fund” and is not dedicated to education. This fact makes the U.S. Department of Education the 3rd MOST PROFITABLE BUSINESS* in the United States, only exceeded by Apple and Exxon Mobile. In other words, the government NEEDS the profit from federal student loans to pay for the exorbitant federal debt that has been created.
- Will the government not give up its greatest source of funding? The posturing around student loan debt forgiveness is just hype and empty promises. It will never happen.
At the end of the COVID pause, Champion anticipates a 70-80% national delinquent rate!
Champion Col-EDGE Solutions has continued to maintain relationships with student loan borrowers under our management to maximize effectiveness for paying down principal during the COVID forbearance period (the COVID pause) and for minimizing delinquencies and establishing good payment habits when student loans reenter repayment in January 2022.
*Based on 2013 reported profit which was the last time the profit on student loans was publicly disclosed and that profit has grown exponentially since.
