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An Open Letter To The Congress And Senate

Financial Aid Crisis In America

I’m writing to you as a concerned citizen and parent. It is no surprise, and I’m sure you are all aware of the significant financial burden that is growing in this country. The financial aid crisis concerns not only the federal government but also the citizens of this country.

“There are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone. Feb 25, 2019, Student Loan Debt Statistics In 2019: A $1.5 Trillion Crisis – Forbes

The ramifications of this are far-reaching, and we need a solution. It is not as simple as kicking the can down the road or hoping the issue goes away. Quite frankly, we know that will never happen. We also know under the current situation, this is not a solvable problem with the current approach.  

“More than 1 million people default on their student loans each year. Nearly 40 percent of borrowers could default on their student loans by 2023. Aug 13, 2018, CNBC

At 1.5 Trillion, the student loan debt is smaller than the 13 trillion that crashed the housing market a decade ago and impacted the global economy. Also, the student loan debt has some collateral in future earnings. Still, unlike the housing bubble where the property was foreclosed and sold at a loss, this crisis is a much slower drag on the economy that can go on longer and have a substantial impact. We will see and have started to see graduates not being able to have families, purchase cars, homes, or plan for future goals. The expense is so great to cover these loans, and they are currently the highest default rate of any loan. The impact will not be fast like the housing crisis or easy to fix, but it will be slow and last longer impacting a higher amount of industry and purchases.

I have co-signed for my daughter’s loans to the amount of 104k dollars. I am 56 years old And the current pace of almost 950.00 a month, it will take me 18 years to pay back. That will make me 74 years old. It will be impossible for me to work to 74.

At this rate, it is 100% certainty I will default, which means you (my government) will start to take some of my social security. Are you following where this is going? If that happens, I will become more of a burden on the government for basic needs. How can this be a logical solution?

Now having said all of that, you would think I would be banging the drum for free tuition or loan forgiveness, but I’m not. You simply can’t wash away a debt of this size. The money or the fallout will impact everybody with this approach. Also, is that fair to people who paid all their loans or paid without the need for loans? What kind of message are we delivering to the American people? Nobody should ever support this. There are no free rides.

I will offer you some suggestions. Many people like me have money in my 401k. If you consider a debt of 104k for the loans against the savings, then it is nothing. For me, I would be willing to pull from that account and pay off my debt, but the law makes this impossible. A win/win for everybody. It frees me of my liability and gives the government back the money loaned out. It also allows me more disposable income.

The money I can spend to help fuel the economy. Also, it allows me the ability in the next ten years of work to put that money back for retirement. With this approach, my social security would be secure, and the risk long term of me being a burden on the government after I retire much less. It helps all individuals in the same situation. The long term is better and faster growth due to more disposable income to spend, specifically for younger people who will fuel the economy for the next generation.

My question to all of you is, why can’t you make this happen? I think forgoing the back taxes and penalties on this withdrawal is a win considering how much you gain by getting all that money back. I’m even willing to pay a small penalty to make that withdrawal and pay my debt. I am quite sure many people would consider this a viable option; to keep their promise of borrowing, pride in knowing they made good on their promise, and have a clear conscious.   

For a young adult like my daughter, there are better ways than a crippling payment every month. This approach limits her buying power and her future, along with many young people. You know, the future spenders that drive the economy? My suggestion to you here is the following; first, take any tax refund they are to get every year and apply it to the debt. It seems a bit silly to get a refund when you owe money regardless if you are making the payments. Next, create an individual tax of some percentage that is pulled from earnings and applied to the debt. I think a sliding fee as their income goes up the rate goes up. These are things that will help cover that burden and ensure the loan is covered. If they never see it, they never miss it, and quietly the debt is paid. Everybody wins. The current approach everybody loses.

People do not want a free ride. People take pride in accomplishments, we want to pay what we borrowed, but you, as leaders, need to start thinking out of the box to make these things happen. Work together, find solutions that are a benefit to the country and all the people. These are not hard problems to solve; you just need to put your differences aside. We all borrowed the money; we are all the better for education; just don’t make it impossible for everybody to do the right thing.

In the current covid pandemic crisis, the two trillion stimulus is a drop in the bucket. If you fix this issue, it will cost us (the taxpayers) nothing and will go further than another two trillion in borrowing to the right a sinking ship. It is about time the American people will be considered first and not big business, the banks, the airlines, the mortgage industry.

I’m looking forward to your solutions and your response. I challenge you to reach out to me. I would be more than happy to come to Washington on my dime to address both houses. Please share with all your colleagues. I am a citizen; I have a voice. More importantly, I want all of you to listen and act. I am providing full contact information I would love to speak to any of you.

Thank You

 Kevin J Wholley

Kwholley63@gmail.com

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