That figure, of course, is just a back-of-the-envelope estimate. It could be significantly lower if, as expected, many of these borrowers increase their earnings over time and are able to accelerate their loan repayment. Some borrowers will also have lower debt burdens, interest rates and so forth. But, on the other hand, also consider that some smaller percentage will have higher debt burdens, or may never secure higher-paid employment. And PAYE is already helping to reduce loan delinquency rates, ostensibly saving the government money.
- More Than One-Quarter of Americans Have Considered Defaulting on Student Loans -- Or Already Have
- Department of Education to Revise Student Loan Servicer Evaluations
- Sallie Mae Earnings Miss; Navient Continues On Track
- Save on Some of Your Baby's $312,000 in College Debt
- Student Loans Lead Consumer Debt -- Surprise!
The scary truth, then, is that while $15 billion is just a ballpark estimate, it's still likely that billions of dollars are being diverted from more productive economic uses (such as buying homes, starting businesses, or raising children) to student loan servicing.
For borrowers who agreed to take on student loans, the cat's already out of the bag: They'll need to repay the loans using whichever available repayment plan best meets their needs.
But that doesn't take the sting out of delaying or altogether abandoning many of their economic dreams. Nor does it change the fact that the omission of the PAYE extension from the new budget could cost the broader economy billions of dollars.
--Written by Janet Al-Saad for MainStreet