Book Review: Game of Loans by Beth Akers and Matthew M. Chingos

Notice: I skim-read this book for the parts I was interested in.

So, this book made me feel really comfortable with my decisions to take out my student loans. I have a lot of student loan debt, am on an IDR plan, and am in the PSLF program. I am not so sure I recommend the PSLF program (see this thread of seven posts, which you can navigate to from the page), but I do recommend taking out loans if you need to. And this book backs me up. There is a lot of fear surrounding them. I say that no, it’s not as complicated as you think. And you have to be really, really stupid or uniformed to screw it up.

Here are some quotes from the book that I found enlightening:

“Graduate borrowing is a completely different ball game, as

we might expect given the basically unlimited loans made

available by the federal government. Graduate programs tend

to be shorter than the four years or more it takes to earn a

bachelor’s degree, but graduate degree recipients still take on

much more debt. The average graduate degree recipient takes

on about $34,000 in federal debt for graduate school, leaving

them with a total of $42,000 including their undergraduate

debt. Excluding students who do not borrow, average debt per

borrower is about $55,000 for graduate school and $61 ,000

including college.”

“Media stories regularly feature struggling borrowers with six-figure

debts, but the typical distressed borrower is actually on the

other end of the borrowing spectrum. Borrowers with relatively

small debts tend to have the most trouble repaying, in

large part because they include many individuals who never

earned their degree and the higher income that comes with

it.” Defaulted loans also tend to have relatively small balances;

a recent analysis found that 34 percent of borrowers who 1e丘

schoo1 with $1,000 to $5,000 in debt in 2009 defau1ted by

2014, as compared to 18-21 percent ofthose with more than

$25,000 in debt.”

“Finally, there should be one repayment program, which is income-driven and automatic. Under this system, students would make loan payments as a percentage of their income. Employers would withhold loan payment in the same manner as they withhold taxes, and remit the payments to the federal government. Since the payment amounts would be determined completely by the borrowers’ earnings, the loan amount and interest rate would only affect how long borrowers make payments and not the monthly obligation. Borrowers would be unable to default on their loans, and there would be a much more limited role for servicers. Borrowers would still have the option of repaying their loans more quickly than the income-driven schedule if they so choose..”

My takeaway: 1) Grad students get basically unlimited loans (thinking about going back to school are we?), 2) you should either go big or not go at all with a loan, because you need a “real” job to pay off even the littlest loans so you might as well finish school with a “big” loan to get that “real” job, and 3) repayment plans are wack and need to change; even a “garnished wages style” system would be cheaper and less complicated than the sh*t pile it is right now.

Though, with a Trump presidency I have no idea if everything I just learned and am certain in will be relevant in a few years.


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