Dear Thinker: 

Oh my, another great injustice in the USA, as described in the article below. This time it's an electrical engineer and his hair stylist wife in their sixties who think it's unjust that they have to pay off their student loans, unlike other borrowers who will have their loans forgiven under a new government forgiveness program. 

The real injustice is this:  Innocent taxpayers end up eating the cost when loans are forgiven, although they had no say and received no personal benefit from the loans.  This includes taxpayers who worked through college and lived in slums so they wouldn't have to take out a student loan.  Due to some tenet of journalism, there's never an article on innocent taxpayers being shafted by their irresponsible fellow Americans.

Photos in the article (not pasted below) show that the couple live in a pretty nice house, a nicer and larger house than my wife and I live in.  The article said that upon graduation, the guy owed $38,000, which has ballooned to the current $117,000, due to missed payments and other irresponsibility.  Are we to believe that an electrical engineer couldn't pay off a $38,000 debt? 

Incidentally, the average outstanding student loan today is about equal to the average outstanding car loan.  The article didn't say what kind of cars the couple has owned over the years.  Should the government forgive car loans?

Regards,
Mencken's Ghost

Student-Debt Forgiveness Irks Some Borrowers

Some people who have paid their loans off see an injustice in federal programs' rules

By 

JOSH MITCHELL

The Wall Street Journal, Updated Dec. 12, 2016 2:08 p.m. ET

Federal programs that forgive student debt are generating outrage from borrowers who stand to get no relief after years of paying down debts.

Every borrower with a federal loan can apply to some version of the plans. But complicated rules and a lack of public awareness are leaving some borrowers much better off than others.

Kristin and Jim Reed struggled for two decades to make payments on the $38,000 he borrowed for college. The balance ballooned as they opted for reduced payments under an extended repayment plan and missed payments some years.

In January, the Texas couple, both in their early 60s, saw no alternative and used most of their retirement savings to pay off the balance—more than $117,000.

Now the Reeds are enraged to learn that millions of other borrowers will get off easier. The government is set to forgive at least $108 billion in student debt in coming years under plans that set payments as a share of borrowers' earnings and eventually forgive a portion of their balances, the Government Accountability Office reported this month.

"I don't think it's fair that some people would get forgiven and not us," said Mrs. Reed, a retired hair stylist whose husband still works long hours as an electrical engineer. "We did everything right."

Mrs. Reed recently wrote a letter to President-elect Donald Trump to point out what she sees as an injustice.

The Obama administration, faced with an unprecedented surge in student debt, has sought to help struggling borrowers by promoting the so-called income-driven repayment programs. The plans cap borrowers' monthly payments at 10% of their discretionary income—defined as adjusted gross income minus 150% the poverty level—and then forgive any balance after 10, 20, or 25 years, depending on several variables.

The programs will likely provide the biggest benefits to newer graduates who immediately enter into the program. Older borrowers who have been paying down their debts for years can't retroactively apply those payments when entering into an income-driven plan, due to a quirk in the law.

The plans also provide the biggest subsidies to borrowers with the largest balances. Government data show those tend to be graduate-degree holders and high earners. Borrowers with smaller balances will often pay more than they would have under a standard 10-year plan due to interest accrual.

And in some cases, two workers doing the same job get different subsidies. For example, a nurse working for a nonprofit hospital would get potentially tens of thousands of dollars more in forgiveness than one working for a for-profit employer, because of a provision Congress created to promote work in the public sector.

That provision—known as public service loan forgiveness—forgives balances after 10 years, tax-free. Private-sector workers have balances expunged in 20 or 25 years and are taxed on the forgiven amount.

The debt-relief programs "favor groups in arbitrary ways that aren't really reflective of service or most people's sense of fairness," said Alexander Holt of the left-leaning think tank New America.

That is creating a lot of resentment among borrowers like Mark Dilley, a 48-year-old single father from Vermont. Mr. Dilley has been paying down his undergraduate debt for 17 years but still owes roughly $50,000, higher than his original balance, as interest accrued.

He has spent his entire career working for the federal government. But to get forgiveness as a public worker, he would have to refinance his loans into an income-driven plan, with the clock for forgiveness starting from zero.

Mr. Dilley said he only recently learned about the public-service plan. He knows he isn't that bad off—he makes $93,000 a year—but he believes it is unfair that others are in line to get huge debts forgiven. He recently contacted his state's two U.S. senators to push for help for borrowers like himself.

"I think, geez, other people are able to enjoy the forgiveness program but here I am as a 48-year-old single dad, which is my own fault, but I can't participate," Mr. Dilley said. "There are a lot of people in my situation that fall through the cracks."

Meanwhile, many borrowers who plan to get student debt forgiven say the programs are crucial in helping them deal with rising higher education costs. They say if Congress can bail out big banks, it should help struggling borrowers.

Sarah Christman, a doctoral student at the University of Texas at Austin, estimates she will owe $100,000 upon graduation. She points out that as a graduate student, the above-6% interest rate on her loans is higher than the rate that undergraduates pay. She plans to become a public health worker and take advantage of the public-service loan forgiveness program.

Ms. Christman says without the program, many workers like her would abandon the public sector for more lucrative private-sector work. "Without the 10-year loan forgiveness program I will pay triple what I actually borrowed," she said. "The thought of this is enough to give me a heart attack."

Corrections & Amplifications: 
Mrs. Reed recently wrote a letter to President-elect Donald Trump to point out what she sees as an injustice. An earlier version of this article incorrectly stated that Mrs. Reed only recently became aware of the debt-forgiveness option. (Dec. 12, 2016)

Write to Josh Mitchell at joshua.mitchell@wsj.com