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Pay Off Student Loans

1015 Words5 Pages

Over the past decade, the federal government has lost a considerable amount of money from student loan defaulters. This matter has raised countless questions about who should pay for these defaulted student loan amounts. Analysts argue that the tax dollars should be used to satisfy the losses since they will limit other students from accessing the same benefit (Rowan, 2013). Other individuals claim that using taxpayers’ money to pay in the event of student loan defaulters would encourage more defaults. This paper seeks to decisively discuss the pros and cons of whether tax money should be used to pay off loans backed by the federal government in the event that a borrower defaults on his or her student loan.
Every year, eligible scholars …show more content…

In an effort to reduce this crises, financial experts believe that students should be permitted to use pre-tax income to pay off student loans. Parallel to the transit assistance and 401 k pre-tax incentives, many Americans believe that authorizing scholars to use their pre-tax dollars to pay off their student loan debt would have two massive benefits. First, it would help recent graduates with repaying their school loans while expanding their economic activity. Secondly, it would benefit local, state and federal governments through improved economic growth, cost-reductions, and employment opportunities. Even more, lawmakers are discussing the possible implementation of an act called the Employer Participator in Student Loans Act that could significantly decrease the student loan debt in the United States. This Act proposes that employers should be permitted to offer employees with tax exempt student loan assistance in addition to annual income. If the bill passes the legislation committee, employers would be permitted to offer up to $5,250 free of tax free to aid employees with their repayment. This would be a colossal incentive for unemployed graduates to pursue careers with the participating companies. This act would create more opportunities for companies by …show more content…

The amount of money repaid by previous student recipients is what determines the amount of money current students will be eligible for. In the case that the number of defaulters is extensive, the loan board’s resources will be restricted, causing fewer students to receive assistance (Halligan, 2016). In order to avoid this crisis, the government should use tax payer’s money to pay off defaulter’s

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