Daniel Collier, one of the study’s authors and assistant professor of higher education and adult education at the University of Memphis, says most people who can afford their payments on a traditional schedule can use reimbursement based on income for their financial security.
“Forgiveness isn’t as generous as people like to think,” Collier says. “Most people who could pay off their debts on a traditional time and in a traditional way are just buying insurance, really.”
Obtaining forgiveness is expensive
Even if you see your loans canceled, you’ll rack up a ton of interest along the way.
At the lowest-paying end, a borrower with a starting salary of $20,000 and $129,500 in student loans would see $237,338 forgiven in principal and interest, but accrue $132,457 in interest only over the course of his term. 25 year repayment period.
For a borrower with a starting salary of $50,000 and the same amount of debt, the amount of principal and interest forgiven would be $162,708, but the borrower would have accrued $167,205 in interest alone over time.
For those with a starting salary of $80,000, the borrower would only see $26,727 of their principal and interest forgiven, but will have accrued $140,601 in interest over time.