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The Future of Student Debt Forgiveness

As indicated by writer Josh Mitchell, the federal government is on pace to forgive at least $108 billion in student debt in coming years – this as an increasing number of borrowers seek assistance in paying down their loans.  The result will be reduced revenues to finance higher education going forward. 

The Obama administration has promoted income driven repayment plans to stem the sharp rise in borrowers defaulting on their loans since the recession.  Enrollment in these plans has more than tripled over the past 3 years to more than five million borrowers who collectively owe in the range of $270 billion according to U.S. Department of Education statistics.  The most generous version of these income-driven repayments caps a borrower’s monthly paying at 10 percent of discretionary income. 

That formula frequently reduces monthly student loan repayments by hundreds of dollars.  Public service workers, a group that includes those employed by a government agency or at most nonprofits, have balances forgiven after 10 years tax free.  The president-elect has indicated that he also supports the idea of helping student loan borrowers.    

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.