Photo (cc) by Lisa Brewster
I’ve often dreamed of winning the lottery and having enough money to pay off my student loans and my house. Of course, it’s nothing more than a dream because I’ve never played the lottery, so my chances of winning are just slightly worse than those of people who fork over money for a ticket.
Paying off student loans with lottery proceeds is the gist of a New Jersey lawmaker’s proposed legislation. New Jersey bill A4631 would create a student loan lottery, where the lucky winner will have their student loan debt paid off.
New Jersey State Assemblyman John Burzichelli said his proposal could provide an easy solution to student debt for the winning ticket holder, according to NJ.com.
“Any vehicle that could provide some relief it seems to me it’s worth talking about,” Burzichelli said.
Burzichelli said the chance of winning the student-loan lottery would be greater than the odds of winning the regular lottery because the pool of ticket holders would likely be smaller.
Tickets for the proposed lottery would cost no more than $3 apiece, according to the legislation, and “the total amount of all tickets purchased by the student cannot exceed 15 percent of his outstanding loan balances.”
The lottery would be operated by an outside vendor who would receive 25 percent of the proceeds. The winner’s proceeds would go directly to the loan servicer.
If the lottery has more money than needed to cover the student loan of the first winner, the remaining money would go to covering debt for a second winner — and so on, until the lottery pot is exhausted.
It’s unclear if the winners of the lottery would have to pay taxes on the money, NJ.com said.
Don’t be too quick to bet on Burzichelli’s lottery proposal. Not everyone is a fan.
Natalia Abrams, executive director of the nonprofit Student Debt Crisis, told Inside Higher Ed that the student loan lottery “sends the wrong message” to those who could potentially benefit from it.
“Gamble to pay off your student loan? It’s all kinds of wrong,” Abrams said. “I think that if they can afford 15 percent of what they owe they should just pay it to their student loan servicer.”
Instead, Abrams said focusing on long-term student debt solutions that could benefit more than just a lucky few is a better idea.
Lauren Asher, president of the Institute for College Access and Success, agrees with Abrams. She told IHE that the lottery is “a bad idea.”
“The only winner would be the company running the lottery who gets 25 cents on every dollar,” Asher added.
The whole idea seems asinine to me. It sounds like another way to saddle students with debt. If a student loan borrower has extra cash on hand to spend on lottery tickets, it would make much more sense to simply pay down their loans instead of betting it on a tiny chance to win a lottery, right?
If you’re overwhelmed by student loans and need help developing a plan to get out of debt, visit our solutions center.
For more ideas, check out “13 Ways to Pay Off Student Loans Faster.”
What do you think of the New Jersey lawmaker’s student loan lottery proposal? Share your thoughts in comments below or on our Facebook page.