Should Student Loans Be Forgiven?

As of May 24, 2024, the SBA had forgiven over 10.5 million PPP loans to businesses, totaling ~$800 billion. Another 37,938 owe an ~ $4.6 billion) and are labeled potential clawback or a code 70 (potential claw back). 

Not so for student loans. These are the people who should have greater productivity at a younger age. And yet, the nation penalizes them the most on loans. They can declare bankruptcy on other loans, just not student loans.

Yet the Federal government has been relentless in holding student loan holder’s feet to the fire on paying the loans. As of EOY 2024, and approximate Student loans held by those 50 years (~ 9 million) and older total ~ $418 million or an ~$45,000 per person. The likelihood of a full payback diminishes with age. And many end up paying interest without touching much of the principal.

Forbearance after a while can not eliminate interest. On some occasions student loans can be in forbearance without accumulating interest or penalties.

If one could snare a 5% interest loan on an average $45,000 debt, it would take a 50+year old 13 years to pay the loan off at $400 per month. At 62 years old and snaring a 5% interest loan and paying $400 per month, a person would need 10 years and would be 72 years old. This is calculated at 50 and 62 years old. Think older and is it possible to do? Not likely.

Maybe it is time to think about aging out of student loans after a certain amount is paid back and/or an age is reached? It could increase productivity.

“SBA’s Actions to Address Forgiven PPP Loans Subsequently Flagged as Potentially Ineligible,” U.S. Small Business Administration