It’s particularly important that the least advantaged in our society are not closed off to the opportunity of acquiring a college education. This is not merely because such an education improves one’s chance of employment, but most of all because a liberal arts education gives one the opportunity to flourish, to discover their interests, aptitudes, and to forge a unique path in life. At least that’s what it did for me. Yet the poorest among us must consider the issue of cost.
As someone who was born to a poor family—a family that remained poor the entirety of my youth—I want to tell you there’s no reason you can’t get a college education…if you want one. After deciding that I wanted to pursue enlightenment in a college environment I used not only the Pell Grant but also college loans to afford my intellectual endeavor. I lived cheaply and focused on my studies. By the time I became a graduate student I used student loans to not only fund my education but also finance my low-paying careers as a freelance journalist and a full-time stay-at-home father to my newly born daughter.
The $100,000 dollar question is but what about all that money you now owe? Won’t you and your family be ruined? The three-part answer is no.
First, a truly enlightening education is priceless. We each need the opportunity to explore great books and ideas, to discover the other ways of thinking about life. College provides many with precisely such an opportunity. It certainly did for me.
Two, people like me choose “Income-Based” repayment. This is a form of repayment which bases repayment on a person’s earnings. That means if you are living on the poverty line as an adjunct instructor with a family of five, then you pay roughly nothing. And when that glorious full-time position comes a knocking and you start making 40K+, then you’re obligated to make appropriate payments–payments you can afford to make.
Three, so long as the Income-Based repayment option exists, you have to ask yourself, how much better off will you be without an education and zero debt? Those who fail to succeed as entrepreneurs may find themselves working in low-wage jobs without much opportunity for economic advancement. Arguably, you’re better off with a mound of student debt and a head full of inspiring and perhaps life-improving ideas then a debt-free existence of low-end slave-labor wages. In fact, I strongly encourage the poor to consider abandoning low-wage labor in favor of using student loans to live and afford for a contemplative period of personal exploration and discovery.
What follows is some basic information on loan repayment. I include three different repayment plans, but my experience is that Income-based Repayment is by far the best option for those with low-income.
Here are the definitions of the repayment plans are from the Federal Student Aid website (https://www.nslds.ed.gov/nslds_SA/SaEcLogin.do):
- Income-Based Repayment (IBR): Under IBR, the required monthly payment is capped at an amount that is intended to be affordable based on your income and family size. You are eligible for IBR if the monthly repayment amount under IBR will be less than the monthly amount calculated under a 10-year standard repayment plan. If you repay under the IBR plan for 25 years and meet other requirements, you may have any remaining balance of your loan(s) cancelled. Additionally, if you work in public service and have reduced loan payments through IBR, the remaining balance after ten years in a public service job could be cancelled. You may contact your loan holder or loan servicer, or visit http://www.studentaid.ed.gov for more detailed information about the Income-Based Repayment Plan.
- Income-Sensitive Repayment Plan (for FFEL Program loans only): With an income-sensitive plan, your monthly loan payment is based on your annual income. As your income increases or decreases, so do your payments. The maximum repayment period is 10 years. Contact your loan holder or loan servicer for more information about this repayment plan.
- Income-Contingent Repayment Plan (for Direct Subsidized and Unsubsidized Loans and Direct PLUS Loans for Graduate and Professional Students): Your monthly payments will be based on your annual income (and that of your spouse, if married), your family size, and the total amount of your Direct Loans. Borrowers have 25 years to repay under this plan, the unpaid portion will be forgiven. However, you may have to pay income tax on the amount that is forgiven.
Here are three useful explanations of the repayment plans.
- Income-based Repayment: http://www.finaid.org/loans/ibr.phtml
- Income-Contingent Repayment: http://www.finaid.org/loans/icr.phtml
- Income-sensitive Repayment: http://www.finaid.org/loans/isr.phtml