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OPINION: High-income families shouldn’t beg taxpayers to cover bills
A pharmacist and his wife with a master’s degree are probably not the most sympathetic cases for student loan bailouts – but the New York Times will try anyways.
The New York Times recently reported on the effects of new student loan bailout plans rolled out by the Trump administration. The changes will collapse a handful of repayment plans into just two.
Enter Matthew Hansen, a 40-year-old clinical pharmacist still hanging onto a portion of his $166,000 in student loans after 13 years.
The Times reports:
In 2013, Dr. Hansen enrolled in the income-driven Pay as You Earn repayment plan, known as PAYE, in which borrowers pay 10 percent of their discretionary income for 20 years. After that, any debt remaining is discharged. But the policy bill will eliminate PAYE from the menu of repayment options in the summer of 2028, forcing Dr. Hansen to enroll in a plan with less favorable terms.
For years, taxpayers have given Hansen a sweetheart deal. Now the terms are being changed, adding five years to Hansen’s schedule.
“His current…bill is $747 a month, he said, and with a baby on the way, it will drop to $647,” the NY Times reports. “But he’ll eventually owe $970 on the older [Income-Based Repayment] plan. [Replacement Assistance Plan] would cost $1,009 monthly.”
A canon of student loan stories is that I assume the media will make a borrower look as sympathetic as possible. So, if the newspaper doesn’t say that Hansen is disabled and is about to lose his job or that his wife makes $15,000 a year caring for terminally ill nursing home patients, then I assume they are doing quite well.
Based on the numbers provided by Hansen, and using the student loan bailout formulas, Hansen likely makes $127,000 per year. That is on the lower end for pharmacists in Utah, so he could actually be making much more.
His wife, Katelyn Grinder, has almost 20 years of teaching experience and a master’s degree, according to her LinkedIn profile. I assume she does not have student loan debt, since the NY Times did not mention it. According to the available pay schedule for her employer, she is likely making at least $90,000 per year.
Even if she plans to stay home with the new baby on the way (the article does not say so), her husband is still making at least $127,000 per year with opportunities to make more as a pharmacist.
I am sure both are great people and it is laudable they are having more kids. But the story illustrates how many of those who want student loan bailouts are highly educated, well-salaried individuals and couples. They want other people to pay off their loans instead of just taking responsibility, sucking it up, and grinding through their debt.
Hansen and his supporters will argue that deal is being unfairly changed on them in the middle of the game. This is the tradeoff people take when they enroll in government-run plans. Taxpayers are asked to fork over the difference, but borrowers take the risk that terms will change. Had Hansen used private student loans he would have more protections. The alternative would be to pay for school out of pocket at the beginning.
Note too that this change applies to a small subset of borrowers – those who took out loans between 2007 and 2014. For those who took out loans after 2014, nothing much changes.
Remember as well that the Hansens still reaped benefits from the PAYE plan. He argues that he paid into the system dutifully for 13 years and now the rules are being changed on him. But he benefited from lower monthly payments for the past 13 years than he would have paid had he followed a normal amortization schedule.
They argue the rug is being pulled out from under them. The situation is closer to a city offering subsidized rent for a two-bedroom apartment that would normally cost $2,000 per month. If someone was paying $1,000 per month and then the city raised their rent to $1,500 per month, that change will affect them, but the renter still gets a good deal, all things considered.
PAYE borrowers face a similar situation, which makes there story less sympathetic.
This is an ongoing problem for the media, which has struggled to find good student loan victims.
The “victims” include:
- A teacher who quit her job and says she cannot make her $200 monthly payments
- A retired AT&T employee who says he must work now to pay off his student loans and protect his inheritance he received from his parents
- An American with a “historic preservation” degree who fled to Prague to avoid her student loan payments (of $60 per month)
The current bailout programs are quite generous – one caller into the “Ramsey Show” shared how she is banking $50,000 per year into retirement while taking advantage of a bailout program that places her loans into deferment.
She makes around $220,000 per year.
The media wants you to feel sympathetic to the supposed “victims” of student loan changes . In most cases the borrowers don’t really need your sympathy.
But they do want your money.
MORE: Tax universities to pay for student loan bailout, expert says
