Biden’s plan for student loans
Many people have two things in mind right now: Biden, student loans, and coronavirus. The pandemic has been brutal for people around the world. Specifically, it has been hard for those struggling with student loan debts. Thankfully, President Joe Biden just signed the American Rescue Plan in time for Americans in need.
We’ll start by discussing the American Rescue Plan that includes the recent student debt cancellation. Then, we’ll go through the details of the Biden administration’s partial relief. We’ll also explore the bright sides and downsides to student debt relief. Lastly, we’ll show some of the other student financial aids available.
President Biden faces a lot of challenges during the first year of his administration. Nevertheless, he launched a plan to help people with their student loan payments. What will be its short-term and long-term consequences for student loan borrowers? If you’re one of them, read further to find out!
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The American Rescue Plan
President Donald Trump ordered a pause for student loan payments. He also launched the CARES Act during his administration to help people during the pandemic.
President Biden took over after Trump and got to work on his first day. He signed numerous executive orders to help out during the country’s time of need.
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One of them included the American Rescue Plan. It involves a $1.9 trillion stimulus to help small businesses, health care, and other staff. You may check its details here.
Recently, President Biden’s student loan relief followed this 2-trillion dollar plan. Some applauded it as an urgent need. Others warn that it might bring adverse long-term effects.
Student Loan Forgiveness
President Joe Biden is canceling a billion dollars worth of student debt for 72,000 borrowers. Only defrauded students may qualify under the Department of Education Borrower Defense.
Federal student loan borrowers qualify if their school misled them into breaking state laws. After applying for Borrower Defense, Biden’s student loan relief will cancel $10,000 from their debt.
Two prominent Democrats wanted a much more significant amount to be forgiven. Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren said $50,000 of federal student loan debt was canceled.
In a previous press conference, White House Press Secretary Jen Psaki said Biden didn’t favor the $50,000 relief. Instead, she reported the support of Biden to cancel $10,000.
The new Education Secretary Miguel Cardona praised the executive action. He said borrowers should have a “fair path to relief” if their school has harmed them.
Some folks hope Biden’s student loan cancellation would lead to more relief. He even promised to fix the Public Service Loan Forgiveness Program (PSLF) during the election.
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Benefits
Many people welcomed Biden’s student loan cancellation. They think it’s been a long time coming for a decade-old crisis. Since 2008, total student loan debt has reached $1.7 trillion.
Borrowers take 20 years or more to pay off their debts. There are even old folks who aren’t done with paying their student loans.
What’s more, 56% support student debt forgiveness. Here are other reasons why people think student debt relief is a good idea:
- It would help with racial and gender equity.
- Student loan forgiveness may improve the economy.
- It could help other people aside from young college grads.
- Student loan debt cancellation could help people get out of poverty.
- It could help provide this fundamental human right.
Many people agree to Biden’s student loan relief, but they see it as a start. They hope further help will come for those finding it hard to pay student debts.
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Risks
Those who disagree with Biden’s student loan forgiveness say it won’t help low-income borrowers. Instead, it would help others who don’t need the aid as much.
These include students from the middle class and above. They say these Americans go to expensive universities and are likely to graduate.
On the other hand, they say people in the lower class often don’t go to college. Even if they do, they usually leave after a semester. This means they don’t have many years to pay.
If Biden’s student loan relief aims to help during the pandemic, it might not help those in need. It might give extra cash to those who don’t need it in the first place.
Wharton finance professor Sylvain Catherine said they should enroll in an income-driven repayment plan (IDR). They’ll end up paying up to 15% of “discretionary income” instead.
Those who disagree with Biden’s student loan relief say it should be part of a policy. The money should end up to those who need it, not those in the middle class or higher.
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Other Types of Student Financial Aid
The Education Department understands how Americans struggle to pay for college tuition. In response, it provides many kinds of financial aid.
Some people might not meet the requirements for Biden’s student loan relief. If you’re one of them, you may want to check out other help from the Department of Education.
These come as grants, scholarships, work-study jobs, military family aid, and international study aid. Learn more about them and choose the one that may fit your current needs.
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Student Loan Consolidation
If President Biden’s student loan relief can’t help you, there are other options. Student loan consolidation could make paying the debt off much more accessible.
It combines multiple student loans into one, so you only deal with a single balance. This could help you focus on studying and build credit.
If you have federal student debts, check the government website for consolidation loans. If you have private student loans, check companies like Sallie Mae.
This has some downsides to it, though. For starters, you might pay a larger total than your original tuition fee. You must also pay it back after you’re done with school.
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Student Loan Refinancing
If Biden’s student loan relief is out of reach, you may refinance your student loans instead. This replaces your current repayment plan with one that’s easier to pay off.
You’ll need to have good credit and income for student loan refi. The terms and conditions you get will depend on these factors.
It isn’t a good idea if you have federal student loans. Refinancing means losing the benefits they give you. Those with private student debts may check their options from private lenders.
Good Money Management
Even without Biden’s student loan relief, you need to handle your money correctly. That means you shouldn’t spend it on useless stuff and put some in savings.
It might also help you get extra cash to pay off those student debts. Submit payments on time, and you may earn good credit while doing it. This could help with more things in your adult life.
It helps you get the goods and services you need. You’ll get the best deals, too, so you can pay them off easier. With good credit, you might find it easier to land a job.
Money management can help you today and in the future. Thankfully, you can learn more about it without spending at all! Click here and check out more tips.
Final Thoughts
Nowadays, many Americans struggle to pay the cost of higher education. President Biden’s student loan relief may help some of them. The rest might need other solutions.
Most people dream of finishing with a four-year bachelor’s degree. Sadly, they find themselves without good job opportunities. The pandemic worsened their chances of getting employed.
Plan carefully before you go to college. See if a degree is right for your goals in life. Don’t just go because your best bud’s in the same dorms. It’s a decision that will change your life.
Do it right, and college could help you land a job with great pay. If not, you’ll carry the debt for several years. Worse, you might still be paying it off in your senior years.
The big-name colleges don’t have to be your only choice. Check out public colleges or community colleges that may have the course you need.
You could always go to trade school instead. There’s a great demand for the trades right now. Unlike what most people think, you could earn a significant income from them.
