Challenged by Student Debt
Many first time borrowers are challenged by student debt racked up recently or even a decade or more in the past. Winning Mortgage, Winning Home outlines how student loan payments fit both in the actual budget and in the lender’s calculated underwriting.
HUD announced on June 18 that it will change the way lenders underwrite student debt. The changes become mandatory on August 16. The lender will use ½% of the principal balance or the actual loan payment. How does that work in your actual budget to live on if the lender and your wallet say different things?
Unfortunately, most individuals borrow for college before realizing the long term impact. Student debt impacts their payments, budget, living arrangements, credit scores, vehicle purchases, family plans and other areas. Would that have changed the decision on which college to attend? Whether to work during college? Likely not.
Student Debt Forgiveness
Many advocate for student debt forgiveness. Those without the opportunity to attend college would find they are paying and subsidizing those who went to college and got better jobs because of it. Like a reverse Robin Hood – take from the poorer, lower income first. Given the current discussion on disadvantaged households, is this a new type of discrimination and racism to forgive student debt? Should those who benefited pay it back and not those who didn’t benefit? What about those who already paid back student loans? Do they get a refund? What if you’ve already been paying—what’s your relief? Is buying a house more important to do today than tomorrow after repaying student debt? If one doesn’t repay student debt, will there be a new push to forgive home loans when payments are troublesome?
There’s no easy answer. A large segment of individuals are challenged by student debt today. There are many opinions and differences of opinions. There are many views on personal responsibility and learning from mistakes. Where do you fall on the issue?