Why the dental practitioner with $1 million in pupil financial obligation spells difficulty for federal loan programs

Why the dental practitioner with $1 million in pupil financial obligation spells difficulty for federal loan programs

Adam Looney

Joseph A. Pechman Senior Fellow – Economic Studies, Urban-Brookings Tax Policy Center

A current Wall Street Journal article informs a startling story of the University of Southern Ca school that is dental whom owes significantly more than a million bucks in pupil debt—a balance he can never ever completely repay. While he could be exceptional—only 101 individuals away from 41 million student-loan borrowers owe more than a million bucks—his situation highlights the flaws in a student-loan system that provides graduate pupils and parents unlimited use of federal loans and ample payment plans. The end result: Well-endowed universities and well-paid, well-educated borrowers benefit at the cost of taxpayers much less well-off students.

While borrowers with big balances are not typical, they account fully for a share that is growing of student education loans. 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 % among these are signed up for income-based repayment plans that mean they might maybe not back have to pay all of the cash they borrowed. More →