Stiff Them!: Your Guide to Paying Zero Dollars to the IRS, Student Loans, Credit Cards, Medical Bills, and More by Gary S. Goodman

Author:Gary S. Goodman
Language: eng
Format: epub
Publisher: G&D Media
Published: 2018-12-15T00:00:00+00:00

Chapter 5

Student-Loan Forgiveness

You may have heard the statistics: Americans owe over $1.5 trillion in student-loan debt. Approximately 44 million borrowers share this burden.

The average graduate of the class of 2016 had $37,172 in student-loan debt. This was up 6% from the prior year. Averages mean that some borrowers are on the hook for zero or merely a few thousand bucks, while others, especially those that have gone on to graduate study, can owe $250,000.

The total student-loan debt outstanding is roughly $620 billion more than the total U.S. credit-card debt. This is staggering.

Compounding the amount of the debt is the fact that millions of borrowers are in default. It isn’t hard to figure out why.

At the risk of making you weary of statistics, approximately 40% of Americans are doing work that is beneath them. They’re overeducated and underpaid. Just making ends meet is hard enough, but if you’re carrying $100K in student loans, then the standard payment on those runs about 1% a month, or $1000.

That’s $12,000 a year. If you are stuck in a poorly paid McJob where you earn $12 per hour, then you’re earning merely $24,000 working over the course of 50 weeks.

There’s tax withholding, and you probably have some costs that also bring down the amount of take-home pay you can call your own.

Let’s say you’re netting $18,000 after taxes and other costs. How can you pay back $1000 each and every month when you’re only seeing $1500 in total?

Can anyone these days live on a mere $500 a month? Even if you’re staying on a friend’s couch or living in your parents’ basement, you have to get around, right?

Where is that car payment coming from, and car insurance? Are you going to live naked?

You get my point. For millions, even simply servicing the loan payments is beyond their means. And if they’re unemployed, well, forget about it. No way can they pay!

This is why a huge number of student-loan borrowers are in default. They have stopped making payments, and they’re nine or more months in arrears.

Here is the breakdown for defaults in 2017, according to Forbes magazine (October 6, 2017):

• Total default rate: 11.5% (previous: 11.3%)

• Total number of borrowers who defaulted in the last three years: 580,671

• Time period measured: October 1, 2013–September 30, 2016

• Public-college student-loan default rate: 11.3% (previous: 11.3%)

• Private-college student-loan default rate: 7.4% (previous: 7.0%)

• For-profit-college student-loan default rate: 15.5% (previous: 15.0%)

These stats don’t capture the number of borrowers on the edge, the ones that are scraping by, making their payments but about to stop, as well as those that are late, but not technically in default, which is declared at the ninth month of tardiness.

It has been widely reported that home ownership is declining because of the student-loan mess that we’re in. The amount of disposable income available even to those that are paying on time is severely limited, so they cannot qualify for mortgages. Nor do they have enough net spending power to handle mortgage payments plus property taxes, insurance, and anticipated repairs and maintenance.

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