With the younger generations so obviously suffering from expensive loan repayments in recent years, it seems obvious that this would become a major political issue and one that would attract the attention of this group in particular.
A coalition of different organizations, coming together into one consortium, has attempted to put a spotlight on a particular kind of student loan option that the government can consider, specifically aligning repayment plans with borrowers’ income.
A press release from one of the organizations involved, Young Invincibles, outlined some of the points made by this joint group, which are elaborated in further detail in an accompanying paper. These include streamlining the process with “an employer withholding system” among other suggestions.
This release also features comments from Young Invincibles’ research director, Rory O’Sullivan, who said that the new plan would hopefully address the needs of those struggling with their payments.
“We know that post-secondary education leads to higher earnings and greater employability, so there’s really no excuse for the defaults and delinquencies that we’re seeing,” O’Sullivan said. “The system needs to work better.”
Bloomberg Businessweek outlined some of the other payment strategies that have been suggested by the government, including extending the payment period by as much has 25 years. Many of these seem to line up with the goals of groups like the Invincibles, in that they favor an income-matching option.
In addition to that, lenders can consider the work they can do to manage credit risk before any money is even lent out. This can include using credit application software to ensure borrowers only receive loans they can handle. This will help reduce the number of forbearances and defaults that might be seen in the long run.
