Do you know who is on the hook for many student loans? You, the taxpayer.
“Since President Barack Obama took office in January 2009, the cumulative outstanding balance on federal direct student loans has jumped 517.4 percent.
The balance owed as of the end of May was $739,641,000,000.00. That is an increase of $619,838,000,000.00 from the balance that was owed as of the end of January 2009, when it was $119,803,000,000.00, according to the Monthly Treasury Statement”
The largest reason for this is Obama’s “Pay As You Earn” (PAYE) program implemented in 2010.
There are several portions of PAYE that are particularly concerning:
1) PAYE repayment is based on 10% of discretionary income;
2) If the payment doesn’t cover the accruing interest, the government pays your unpaid accruing interested for up to three years from when you begin paying back your loan under the PAYE program.
3) The balance of your loan can be forgiven after 20 years if you meet certain criteria
4) Your loan can be forgiven after 10 years if you go to work for a public service organization
Think the debt balloon is bad now? The program will be severely unsustainable once loans start to be repaid — with interest often being covered by the federal government– and later, loan forgiveness options kick in, with the balance paid by the federal government.
And the federal government is…YOU.
More on how the PAYE program hurts the economy: