What does $ 50000, 10000 student loan forgiveness mean for borrowers?
Phillis Winter owed student debts for more than 30 years. At the age of 67, she still has a debt of approximately $48,000. Now she wants to change, and President Joe Biden will forgive her loan. Winter, who lives in Georgia, said: “It would be good if I could die without this debt”. But she counted: “$10,000 cannot do it. I still have $38,000, so I can’t afford it.”
Chances of Student debt forgiveness are more likely than ever to become a reality. During the campaign, President Joe Biden agreed to cancel each borrower of US $10,000. And He asked the Secretary of Education to cancel up to US$50,000 for each person to prepare a report on his legitimate authority.
However, even among those who advocate the exemption of school debt, there are discrepancies. Especially in terms of the extent of the exemption and who should obtain it. For example, some people tout the idea of only allowing basic worker loans and low-income Americans.
Higher education expert Mark Kantrowitz lately compiled a report assessing some of these various forgiveness plans and their potential impact. Below are some of them:
Forgiveness by age?
More and more Americans are getting student loans before they reach advanced age. Many of them cannot have enough money to pay. The Government Accountability Office reports that one-third of student loan borrowers over 65 are in default. And also half of the student borrowers over 75 are lagging.
Even Though Winter has prevented default. And she said, her student loans have rendered it difficult for her to qualify for a loan. She recently struggled again but was rejected. For financial purposes, she’s now living with her daughter but longs to have her home, especially at this time in her life. Winter said, “It would mean being able to be with myself for a while.”
According to Kantrowitz, the cancellation of student loans over the age of 65 will cost the government approximately $59 billion and affect 2 million people. This move is not extraordinary. For example, the Swedish government allows loans to all borrowers over the age of 68, and the U.K. has a similar strategy.
Some people suggest canceling loans in specific industries, which have made a significant contribution to society and the debt load. For example, Kantrowitz discovered that canceling a student loan for a social worker would cost the government approximately $18 billion and provide relief to approximately 400,000 people.
The government will have to pay about 117 billion U.S. dollars to cancel teacher debts, which will leave about 3 million people debt-exempt. During the pandemic, the concept of debt relief for doctors and nurses is also trendy. This will cost about 250 billion U.S. dollars and may affect about 1 million people.
Some consultants say that the cancellation of student loans should target low-income Americans, noting that many people with education debts have high incomes.
About two-thirds of American student loan borrowers earn less than $100,000 per year. According to Kantrowitz’s analysis, the government would spend approximately US$938 billion to cancel loans for anyone below this level. One-third of borrowers earn less than US$50,000 and only allowing these people to take out loans cost about US$437 billion.
$50,000, 10000 Student Loan Forgiveness
The main problem facing those who support student loan repayment is how much debt should be repaid.
According to Kantrowitz, if all federal student loan borrowers are exempted from assuming a debt of US$10,000, the country’s outstanding education debt will be reduced from US$1.7 trillion to approximately US$1.3 trillion. About one-third of federal student loan borrowers (i.e., 15 million) believe their balance will be zero.
On the other hand, canceling all borrowers’ $50,000 will reduce the country’s student loan debt from $1.7 trillion to $700 billion. At the same time, 80% of federal student loan borrowers (i.e., 36 million) will have no debt.
Not everyone will be satisfied with the most generous plan. One in five federal student loan borrowers owes more than $50,000, and about 7% of borrowers owe more than six figures.
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