Joseph A. Pechman Senior Fellow – Financial Studies, Urban-Brookings Tax Policy Center
A recently available Wall Street Journal article informs a startling story of a University of Southern California school that is dental whom owes a lot more than a million dollars in pupil debt—a balance he can never ever completely repay. While he is exceptional—only 101 people away from 41 million student-loan borrowers owe significantly more than a million bucks—his situation highlights the flaws in a student-loan system that provides graduate pupils and parents limitless usage of federal loans and ample payment plans. The effect: Well-endowed universities and well-paid, well-educated borrowers benefit at the cost of taxpayers and less students that are well-off.
While borrowers with big balances aren’t typical, they take into account a share that is growing of figuratively speaking. A 3rd of all of the education loan financial obligation is owed by the 5.5 % of borrowers with balances above $100,000—and a lot more than 40 % of those are signed up for income-based repayment plans that mean they might maybe not need to pay straight back all of the cash they borrowed.Continue reading