One of the most talked-about topics in politics at the start of the Biden presidency has been the prospect of student loan forgiveness. Millions of college students take out many thousands of dollars in loans to attend college, and millions more have paid on their loans for decades without seeing any dent in the overall amount owed.
An article from CNBC suggests that the amount of money owed by students and former students has increased by more than 100 percent in the last decade. The Federal Reserve revealed that the overall amount owed was greater than $1.7 trillion. The number increased by four percent during the 2020 pandemic.
“The decades-long increase in student debt is even more noticeable when compared to decades prior. In quarter three of 2010, Americans owed roughly $845 billion in student loans, which means that U.S. student debt has increased by approximately 102% in the past decade.”
It seems like articles are published each year that indicate that the overall number is growing by a hundred million dollars every year. Unfortunately, much of the debt is increasing due to the interest rates owed by students on their loans.
An article from Nerd Wallet suggests that the average interest rates on student loans vary greatly and may go from 1.99 percent up to 14.50 percent and depend on the type of loans received. Fixed-rate private student loans can reach 14.50 percent, but fixed-rate federal student loans for undergraduates have been around 3 percent in recent years.
“The average student loan interest rate is 5.8% among all households with student debt, according to a 2017 report by New America, a nonprofit, nonpartisan think tank. That includes both federal and private student loans — about 90% of all student debt is federal.”
Student Loan Forgiveness May Come in the Future
Some senators and representatives in the U.S. Congress have talked about sending a bill to the floor that would forgive a substantial portion of the average student loan balance, but efforts to include student loan forgiveness in legislation have been somewhat futile. An article from Forbes explains:
“[T]he Biden administration has maintained that the White House will push Congress to pass additional legislation in the coming months providing for student relief, including some level of student loan forgiveness for borrowers. Biden has supported $10,000 in student loan forgiveness but recently came out against $50,000 in student loan forgiveness proposed by Democratic lawmakers and student loan borrower activists.”
The only immediate relief that student loan borrowers will likely see in the coming months is the continuation of the pause on student loan payments, interest, and collection activity. The Biden administration extended a Trump-era pause until September 30, 2021, on student loan payments.
So far, President Biden has expressed doubt that he had the legal authority to cancel student debt, but he’s asked the government to investigate the possibility of canceling the debt and figuring out whether he could pass the legislation. Although some student loan forgiveness advocates have asked for the cancellation of $50,000 in debt, Biden has only suggested an elimination of $10,000 in debt.
Are You Worried About Student Loan Default or Bankruptcy?
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