Are you one of the millions of people with student debt? Did you apply for a federal loan and still owe more than the original debt?
President Joe Biden this week unveiled a federal plan that, if finalized, will bring relief to millions of people suffering from student debt.
More than 25 million college graduates currently owe more than they originally borrowed, including many who have been making payments for years, due to high interest rates on federal student loans.
Under the new plan, up to $20,000 of the amount a borrower’s balance which has increased due to unpaid interest on their loans would be canceled after they start repayment, regardless of their income, according to the White House.
Low- and moderate-income graduates enrolled in the SAVE plan or any other income-based repayment (IDR) plan would be eligible to have the entire amount of the balance which has increased since they began repayment cancelled.
This group of borrowers includes singles earning $120,000 or less and married borrowers earning $240,000 or less. No application will be necessary for borrowers to receive this relief if the plan is implemented as proposed.
The White House estimates that interest balances accrued to date would be forgiven for 25 million borrowers, and 23 million will likely have all growth in their balance forgiven.
The sad reality is that millions of students who had to resort to student loans continue to see their balances grow due to accumulated interest, even though they have met their obligation to make monthly payments.
Worse yet: many have had this unpaid interest capitalized, which has been added to their principal balance. That is, they are paying interest on a higher amount than originally requested.
The student debt relief plan is being carefully designed to prevent it from being challenged in court, as has happened on other occasions. Therefore, it focuses on specific groups, especially low-income people.
It is important to understand that the issue of student debt is much more than a personal problem, as it affects equity, social justice and even the economy.
High debt prevents graduates from achieving goals like buying a home, starting a family, or saving for retirement. This reduces the economic stability and mobility of society. Needless to say, this negative impact is disproportionate on lower-income people, such as Latino or Black minorities.
It is obvious then that student debt exacerbates inequality and helps perpetuate the cycle of poverty. Opposition to a debt relief plan of this nature can only come from those who seek to keep certain groups oppressed. Guess who is one of his main opponents?
Correct. Donald Trump.
