On day one in the White House, the Biden administration should follow through on their commitment to student loan forgiveness.
The Biden administration made a six proposal plan for loan forgiveness, which would alleviate the burden of debt for many Americans.
The proposed plan includes forgiving $10,000 per borrower with the Heroes Act. Another great proposed option is forgiving tuition-related student loan debt for undergraduate students who graduated from historically Black colleges, public colleges, and minority-serving institutions. That plan could potentially benefit Black and minority students significantly.
The Biden administration took into account providing forgiveness for hard-working government employees as well. The administration is proposing a reformed public service loan that will be attainable for anyone who works a full-time public service job, and will provide up to $10,000 per year for up to five years. Furthermore, the proposed new income-driven repayment plan will reduce someone’s monthly payments by 5% of their discretionary income. Ultimately, it will help keep someone’s debt-to-income ratio lower and increase their monthly income.
Currently, Americans are unable to file bankruptcy and have their student loans removed. The new proposal will restore bankruptcy rights by allowing student loans to be removed in bankruptcy. This will give people who need to file bankruptcy the opportunity to erase all debts.
In the proposal, it will help graduates not receive any unnecessary debt by canceling any debt made in error by the college or university. Lastly, a plan has been introduced that could give high school graduates with limited income a chance to attend college by providing tuition-free community college to families who make less than $125,000.
Now more than ever, Americans need student loan forgiveness due to the financial hardships created by COVID-19. Millions of Americans are without a job, and they’re still forced to make ends meet to provide for their families. Some people add to their debts to survive by applying for personal loans, including credit cards and lines of credit to supplement income.
According to EducationData.org, student loan debt is now the second-highest consumer debt category. Nationwide, 43% of college attendees report they incurred some educational debt. Among today’s college students, 65% graduate with student debt.
As a licensed real estate agent, I see firsthand the effects of my potential clients not being approved for a mortgage because of their student loan debt significantly affecting their debt-to-income ratio and credit score. It’s extremely unfortunate because many dream of becoming homeowners to build generational wealth, receive tax advantages and leverage home equity.
Some college graduates are overwhelmed with their student loan debt, including Kira Dean, a Florida International University alumna.
“Graduation day, I was filled with excitement because I finally made it,” Dean said. “However, my excitement quickly left when I realized how much I was in debt due to student loans. The burden of my student loans makes me depressed, overwhelmed, and gives me anxiety.”
According to The Center for American Progress, About 43 million adult Americans—roughly one-sixth of the U.S. population older than age 18—currently carry a federal student loan and owe $1.5 trillion in federal student loan debt, plus an estimated $119 billion in student loans from private sources that are not backed by the government.
Hopefully, the Biden administration can stay true to their promises.