Pay back student loans before retirement
Liz Kelley, a Missouri high school teacher and mother of four who made a series of unremarkable decisions about college and borrowing. She now owes the federal government $410,000, and counting..
the department is the world's nicest, most accommodating lender. Interest rates are set by Congress and are lower than banks charge in the private market. Borrowing for college is essentially an entitlement -- as long as you're enrolled in an accredited college and aren't in arrears on a previous student loan, it doesn't matter how much debt you have or how little money you make. Undergraduate loans are capped to contain borrowing and college costs, but graduate loans are bound only by the vague limits of "living expenses."
Private lenders also don't let people defer making payments for years or decades at a time.
A private sector lender approached by a potential borrower with no assets, a modest income and $350,000 in debt who had never made a payment on that loan in over 20 years would not, presumably, lend that person an additional $7,800. But that's exactly what the Department of Education did for Ms. Kelley in 2011. Legally, it could do nothing else.
Our culture also encourages a great deal of trust in colleges. When people walk onto a used-car lot, they generally understand that promises of easy credit are just another tool for a slick salesman to close a deal. The local university and the Department of Education, by contrast, are assumed to have students' best interests in mind.