It’s a bureaucratic bungling that just might wipe out five billion dollars in student loans. As the government and the financial and educational sectors are coming to grips with the crisis and trying to find a solution to it, one question that is coming up is: what will this mean for the millennials who are new to the workforce? To millennials who have more debts to pay than their Gen-X and baby boomer parents, bosses, and senior colleagues?
The answer: they might be able to enjoy a more financially stable and secure life. They can probably launch the businesses they have long dreamed of. And finally, they can get their own taste of the American dream and own their own homes.
According to The Business Insider, at the heart of this maelstrom is the National Collegiate Student Loans Trust, which is an association composed of bankers, investors, and credit lenders. The National Collegiate holds about 800,000 of student loan accounts for a total of $12 billion. It is known for its diligence and persistence in taking to court students-turned-professionals who default on their loans.
The report says, however, that the paperwork that will support about $5 billion in loans and their collections is far from coherent, prepared, or available. Without the paperwork, the National Collegiate cannot collect on the loans. Failure to collect can mean that those students will be freed from their financial obligations.
It is a predicament that these former students, many of whom are working in their first or second jobs, would welcome. In one interview conducted by Fox Business, a huge population composed of 18-29-year-old millennials actually wants the government to forgive their debts.
Many of them did pay more for their education than the previous generations and are now feeling the burden. Easing up on this burden would empower them to pursue their entrepreneurial dreams – or at the very least, increase their financial ability.
Right now, the weight of their student loans is preventing millennials from the ages of 28-30 to secure a mortgage for their own homes. According to the Federal Reserve Bank of New York, this demographic experienced an 11 to 35 percent decline in purchasing their own dwelling spaces from 2007-2015. Any significant relief that will reduce their financial loans might finally grant them the opportunity and means to start paying up for their own accommodations.
But Fox Business maintains that sudden debt relief, thanks to the government’s generosity, is unlikely. The total student loan worth in the U.S. is $1.3 trillion—wiping out a third of that will cost the government $330 billion, which it plainly cannot afford.
In the meantime, though, National Collegiate may not feel as equally generous. But unless it finds and secures its own paper trail, it just might fulfill the dreams of debt-saddled millennials—reluctantly and at its own enormous risk.
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