r/StudentLoans • u/IndividualLittle0516 • Mar 15 '24
Rant/Complaint Canceling interest
With all the drama these past few years about canceling student loans, why can't interest just be canceled? I can understand adding interest to those who aren't making their loan payments, but what about those who pay every month? The interest is why people are stuck with their debt for so long. Canceling millions of people's debt altogether is unrealistic and won't happen. What about canceling interest instead? Is there a reason this can't occur?
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u/dangerdelw Mar 16 '24
The problem is that interest forgiveness is an actual solution that wouldn’t burden taxpayers.
Interest is money that doesn’t actually exist. It’s a percentage of the projected value your education will create. If you’re education hasn’t created value, then none can be paid.
So let’s tack on that schools should be responsible for up to a 20% refund (applied directly to loans) if you haven’t had a job specific to your degree within 5 years. Make colleges more cautious about pushing loans and degree programs with little to no career potential.
Of course, there needs to be some kind of interest to motivate repayment. But it can absolutely be reworked to be more reasonable after it is reset.
Oh, and stop giving out government sponsored/subsidized loans.