Letter to the Editor: Reader says concerns about federal student loans is misdirected

In a recent Speak Up titled “Forgiving student loan debt versus other debt” (March 16) was an introductory paragraph relating to “forgiving student loan debt versus other debt.”

Five individuals wrote in decrying the concept. They complained that others would be paying a loan for an unknown student; that loan forgiveness could/would be buying the votes of 18-34-year-olds; that a student’s debt “is not my responsibility”; that forgiveness would increase the national debt; and that it would be “money given out, … money not returned.”

That first paragraph points out that 92% of the COVID-19 “Paycheck Protection Program loans have been granted full or partial forgiveness.” Those loans were intended for “small” businesses. However, some loans were taken by the wealthy like Tom Brady and Khloe Kardashian and members of the House of Representatives and Senate. Most of these have not been repaid. However, an example of the latter is Ruth’s Hospitality Group that received $20 million in “forgivable” loans. After some controversy, Ruth’s promised to repay the loans given to two subsidiaries. Of the original $521 billion in loans, either legitimate or fraudulent, most remain unpaid (see line one).

The proposed student loan forgiveness, limited to $10,000 and $20,000, applies to federally issued loans. The PPP loans (and forgiveness) made to businesses were in the billions.

Federal loan interest is lower than commercial and more flexible about repayment. Regardless, interest is charged just like any other loan. Look at “Debt.org” to discover the types of federal student loans, their interest rates and payment schedules. The federal loans allow student borrowers to postpone payments for six to nine months, so they can establish themselves. However, interest is charged during any deferment in making payments. This can lead to a student paying off the original loan amount and its interest, but the added interest must be paid, which can, and often does, balloon the debt to unmanageable levels. Unfortunately, for the Gen X and millennial borrowers, the longer one has to make payments, the ultimate monthly payment of the loan often increases to 25% of their income. Very often, this forces the borrower into a situation in which the original loan and interest are paid several times over.

Like any kind of installment debt, student loan debt can adversely affect one’s life.

I was very fortunate that my parents were able to pay for my undergraduate years. After several years working postgraduate, I was able to afford a master’s on a part-time basis, while being the family breadwinner.

Perhaps the writers of the responses should complain more loudly about the forgiven PPP loans taken and used by big businesses to enrich themselves, their owners or their executives.

Alan P. Gaddis

Dover