In December of 2011 a young man named Matthew Nelson graduated from the University of Southern Maine with $27,000 in student debt. A few weeks later he was diagnosed with Hodgkins lymphoma. Currently undergoing his fifth out of six rounds of chemotherapy, he is also stuck in the middle of both a student debt and a health care crisis. Matthew is deferring his debt and trying to keep the endless stream of $10,000 doctor bills in perspective: his focus is on getting better.
Less than a month into his new full-time marketing job, Matthew was forced to give up on trying to work while undergoing some of the most brutal chemotherapy that’s out there. Unfortunately he had to step down from his job before his healthcare benefits kicked in, but he has been able to remain on his father’s insurance during his first year after graduating college because of ObamaCare.
Meanwhile, the interest on his student loans continues to build during the time he is deferring his payments as he works on recovering his health. A year and a half ago, Matthew was a healthy 24 year old and at low risk for developing health issues. He had never had any major health problems, was a non-smoker and at a healthy weight; he was the last person to expect to learn there was a softball-sized tumor growing in his chest. Obviously, none of this was known while Matthew was agreeing to the terms of his student loan repayment plan.
Usually, students are funneled into a standard repayment plan before they have very much information on the subject. This plan is frequently not in the best interest of students who are in perfect health, are willing and able to work and remain so even after college. In Matthew’s case, it would help him out a lot to have a monthly payment that is based on his income, since at this time his ability to earn is significantly impaired.
One of the downsides to an income-based or income-contingent repayment plan is the increased interest accrued over the life of the outstanding loan. However, in this instance, the borrower, Matthew, is already racking up interest by deferring payments that he can’t make while in his current condition. A more forgiving plan could really help him out a lot. If Matthew’s income is near or below 150% of the poverty line, his monthly income-based repayment will be $0.
Understandably, Matthew has little interest in thinking about his financial woes. His health is much more valuable to him. But it would be great for him (or anyone else facing a similar problem) to have someone else looking out for his interests; to have access to information and assistance that will help him now, before he’s so hopelessly indebted that there seems to be no way out.