Meet a 52-year-old who struggled to pay off their $480,000 in student debt on income plans and has pushed off retirement: ‘This is an albatross around my neck in my life whole’

  • Angel, a 52-year-old borrower, has $480,000 in student debt.
  • Their debt has increased due to the payment of income repayment plans and the interest rate.
  • Biden announced changes to those repayment plans, but it was unclear how they would be implemented.

For many years, Angel’s main focus was on making things last.

Coming from what they say is a low economic background, Angel – who asked that their last name be withheld for privacy – grew up in the 80s surrounded by the idea of ​​going to college is the key to getting a good job and a good life.

Since Angel’s parents didn’t have the money to finance Angel’s college education, student loans were the only option – and now, at 52 years old, Angel is are looking at a $480,766 student loan they expect to last their entire lives. .

“I was told when I was young that you had to get a college degree, you had to get an advanced degree if you wanted to get ahead in this world, and that Now I can’t pursue that American Dream,” said Angel to Insider. “I can’t even buy a house. I’m 52 years old. I mean, at what point do we say, ‘No, this isn’t right?'”

The reason Angel’s debt has increased over the past several years is due to many factors. First, to get a good paying job, Angelo pursued two Master’s degrees, but they didn’t end up getting those degrees until 2012 because they worked together to save money. At that time, their student loans from elementary school were deferred, which means that although they are not actively paying their loans, interest rates continue to accrue. Angel also said that the business representative advised them to stay at school in order to prolong the postponement.

And secondly, once the Angel loans were removed from deferment, they enrolled in a repayment plan (IDR)., which aims to offer borrowers affordable monthly payments based on income and the promise of loan forgiveness after 20 years. However, as latest report It has been pointed out that the plans are flawed because of the problems that follow the progress of the borrowers’ payments, which means that getting relief through those plans was difficult.

President Joe Biden’s Department of Education announced recently plans to reform the IDR, including cutting student loan payments in half and limiting interest rate growth, and plans to implement the changes this year. But it’s not clear what those changes will mean for borrowers like Angel, and Angel said so far, it’s been a challenge.

“I’ve been struggling to find a job that’s enough to make ends meet even if it’s just to pay a roof over my head and pay my rent, pay for food, pay for the tax.” car, I don’t live frugally but only what is necessary. it’s life, and now I’m doing the income repayment plan for a while,” said Angel. “But it’s so confusing and they don’t make it easy.”

“This is an albatross around my neck”

Recently, Angel was employed in a government job and said they were lucky to end up in a job where they could use their degrees in communications and market. But landing a steady job later in life doesn’t really help their financial stability now, or in the future.

“So now that I’m 52 years old, I think this is an albatross around my neck for the rest of my life because even in retirement, Social Security, you know, I might still be paying off these loans. ,” Angel Angel. said. “And I know that’s a concern for a lot of people I know with student loans.”

“Right now, I don’t see myself retiring,” Angel added.

Because of their new government role, Angel said they are pursuing the Public Welfare Program (PSLF)., which provides student loan forgiveness for government and non-profit workers after ten years of qualifying payments. The Ministry of Education is planning to implement changes in that program, as well – and the Secretary of Education Miguel Cardona is announcing the changes and the effects that will be experienced by borrowers.

“Our Improvements to the Income Recovery Program will save teachers 17K in the first 10 years of their career – even when they receive State Forgiveness.,” Cardona written on Twitter on Tuesday. “That’s a big deal! We work for you!”

Like Angels, and many other student loans, told Insider, the interest rate is the main reason why many people have increasing student loans that they can’t keep up with. For most borrowers in income-based programs, monthly payments fall below the interest owed on the loan, and that difference is added to the loan application. This can lead to borrowers taking out more money than they originally took out. The department’s proposal would prevent unpaid monthly interest from being added to a borrower’s principal balance if they are making their monthly payments — even if the payment is $0 because of the high interest rate. their income.

But there are still many questions about the effectiveness of the changes. The recent Congressional spending bill did not provide any additional funding to the Federal Student Aid office, a senior administration official told reporters on a conference call. now that the inability to raise funds will be a challenge in implementing the policies of the department.

The job will be more difficult with Biden plans to cancel up to $20,000 in student debt for federal borrowers making less than $125,000 a year. The plan is now blocked and headed to the Supreme Court on February 28and Angel said that the relief will not make a change for them – but the changes in the way the student-loan uses interest.

“If education is really about us contributing more to society, why are they charging interest on student loans?” Angel said. “Cancel all interest on those student loans.”

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