Are we really out of pocket as tax payers? I have written my senators and the rotating district representatives, the head of student loans and the CFPB with suggestions about SL. ONLY Congress can change the rules. The capitalized interest is a nuclear shovel that puts folks into a deep black hole. Reasons for getting behind? For many it’s only temporary, medical, laid off, fired, underemployed, between jobs, etc. and during the period if payments are unable to be made the shovel is digging, I proposed using simple interest- reconfigure all the loans using simple interest and eliminate the capitalized penalty. Of course deaf ears.
I also proposed vesting the colleges in the success of their graduates.
Initially, ask the colleges to provide an upper ceiling of total loans they can live with. They are then capped. When they max out, that’s it. As their grads pay down the loans then the difference between the payments bringing down the total balance and the capped loan amount this the dollar amount the schools have to lend.