Taxpayers, hold onto your wallets for Student Loan Debts.
The Government Accountability Office announced last week that at least $108 billion in student loan debt will be forgiven in the coming years and will leave taxpayers on the hook for the debt repayment, according to FOX News.
“Forbes on FOX” panel member Sabrina Schaeffer of the Independent Women’s Forum said “Government created a problem and now they’re making it worse.”
In Minnesota, MPR News reported earlier this year that approximately 70 percent of Minnesota students take out loans to pay for college. Minnesota ranks fifth in the nation when it comes to the debt students accumulate over their college years. The average Minnesota college student graduates with about $30,000 in debt.
Bill Baldwin, an investment reporter, suggested on Forbes on FOX that instead of having the government lend money to college students, colleges themselves should take the financial risk on each student they admit.
According to a recent article in Money Magazine, President-Elect Donald Trump proposed a student-loan forgiveness plan after 15 years. In October, Trump promised an audience in Columbus, Ohio that he would implement a plan that would be income-based where graduates would pay 12.5% of income and loan balances would be forgiven after 15 years. He has also suggested winding down the federal student loan program and shifting lending to the private sector, according to the Wall Street Journal.
Money Magazine states that there are currently about 4 million borrowers that are enrolled in an income-based repayment plan, but the earliest that debt can be forgiven under those plans is 20 years. Under current plans, any forgiven debt is considered taxable income for private-sector workers, so borrowers could still owe the IRS thousands of dollars, depending on how much debt is forgiven. Public-sector workers aren’t taxed on forgiveness.