"Another major critique of the repayment process is the fact that borrowers too often spend more time paying down interest that has accumulated on their student loans due to high rates as opposed to paying down their principal balance. Third Way suggests policymakers could institute a cap on student loan interest accrual so that it does not exceed the annual amount required to cover the government’s cost of servicing the loan, implement a fee that is charged upfront instead, or scrap interest accrual altogether. “This would address the frustration of borrowers, particularly those in IDR, who continue to make timely payments as required under their plan, only to see their balance continue to grow year after year,” according to the memo." Continue reading here. Feel free to share your thoughts in the comments.

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