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Will President Biden Forgive Student Loans?

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Phto by pogonici on Deposit Photos.
How Much Money Do You Need To Retire In America?

CNBC reports that “a college education is now the second-largest expense an individual is likely to make in a lifetime — right after purchasing a home.” President Biden’s delayed student loan forgiveness announcement is causing unnecessary financial anxiety. As we owe $1.75 billion in student loan debt, will Biden give Americans the relief they need?

How Much Student Loan Debt Relief Will Biden Offer?

Biden indicates openness to $10,000 of debt relief per borrower, but concerns about inflation abound. Is this student loan forgiveness plan too good to be true? Also, does the President have the legal authority to cancel student loans, or does he need approval from Congress? We anticipate a public debate regarding which governing body can forgive student loans. 

If implemented, the White House is considering an income limit for loan forgiveness, says the Washington Post. According to CNBC, the debt forgiveness may include graduate and parent plus loans, while private loans likely will be excluded. Plus, borrowers who provided lenders access to income data could see student loan cancellation within several months.

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Federal Student Loan Holders May Be in For a Shock

Also, 42 million federal student loan holders have not had to make payments or accrue interest since March 2020. Consequently, with the student loan payment pause set to expire on August 31, 2022, borrowers and lenders are frustrated over the lack of clear policy direction.

“Experts point to the upcoming midterm elections, a possible looming recession, and the fact that borrowers have not received any information about the restart of repayment,” says Time Magazine.

The two questions every loan borrower asks are: “When will I have to make payments again? And how much am I going to have to repay with cancellation looming?” says the National Consumer Law Center.

The Two Types of Student Loans You Need to Know About

With subsidized loans, the U.S. government pays your student loan interest as an undergraduate student. No payments are due up to six months after graduation or while you are on deferment/forbearance. These loans are based on financial need and have lower annual lower limits. With unsubsidized loans, the borrower is responsible for the interest from the moment of approval. Graduate and undergraduate students can apply for unsubsidized loans not based on financial need, with higher annual loan limits. When repaying your student loans, prioritize repaying your unsubsidized loans first since they accrue interest during college.  

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Photo by christina@wocintechchat.com on Unsplash

How Student Loan Debt Disproportionately Affects Black Americans and Women of Color

Black students borrow twice as much for education as other ethnic groups. “Almost half of Black students—49%—are likely to borrow federal education loans, as opposed to 29% of Hispanic or Latino students and 21% of Asian students”, according to the Education Data Initiative. In addition, “the average Black student loan borrower takes on nearly 50% more debt for a bachelor’s degree than his or her white peers,” says the Roosevelt Insitute.  

There is an unfair burden of student loan debt on women of color. Fortune Magazine reports, “women of color experience a ‘double whammy,’ because they are both the most educated and indebted college demographic in our country. Women of color owe 22% more student loan debt than white women and are paid 64 cents to every dollar compared to white men.”

Will Joe Biden Bring Student Loan Forgiveness?

While President Joe Biden should decide on federal student loan forgiveness this month, you can learn about current debt forgiveness programs and income repayment plans at studentaid.gov.

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