Student loan forgiveness has been a big topic in recent days. Especially with the WH declaring that the covid induced moratorium on student debt would be extended to January 31.
Follow along as we dig into some of the causes and effects of the country’s staggering student loan debt crisis.
Student Debt Forgiveness
Borrowers are fighting back against student loan debt. They are asking for student loan forgiveness.
However, the government has made it more difficult for students to receive loans, and the federal government is not doing enough to help graduates with their debts.
Toll Of Student Loan Debt
They are not only burdened by their monthly payments, but they might also be struggling to make ends meet and pay for day-to-day living expenses.
To help these young people manage their debt, the government has created an Income-Based Repayment (IBR) program.
- IBR is an income-based repayment plan that caps your monthly payment at 10% of your discretionary income, defined as your adjusted gross income minus 150% of the poverty line for your family size.
- Families earning less than $20,000 have no cap on how much they owe each month under this plan.
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Student Loan Debt Facts
Student loan debt forgiveness is an issue that affects a lot of people. But most people don’t know how to get started or even what they should.
- The average student loan debt is over $37,000 in loans, which translates into monthly payments of more than $400.
- Now imagine if you had two kids and one spouse who also needed to go to school.
- The financial strain can be impossible to bear when trying to provide for your family on a single income.
Loan Forgiveness And Recession
In 2008, the world’s economy witnessed an abrupt decline that devasted the financial markets. The Great Recession’s economic crisis caused millions of Americans to lose their homes, jobs, and life savings.
- The economic crisis opted Americans to go back to schools to learn some new skills.
- Between 2008 -2018, the economy stabilized gradually in the country.
- Unfortunately, secondary education funding did not return to pre-2008 levels as the Federal and state governments cut most of the financing to restabilize the economy.
Since that time, education costs have started to rise in America, and these soaring college costs put the students in a difficult situation. College is more expensive than ever before. The average tuition fee for a four-year degree has increased by 24% in all 50 states.
On average, an American student spends $25,396 for one academic year, while the cost is twice for private colleges. As of December 11, 2020, an American student earns $45,242 annually, making it impossible to afford private colleges.
Student Loan Forgiveness Bill 2021
Thanks to the economic crisis unleashed by COVID-19, student loan debt has reached the highest level of $1.465 trillion in 2020, almost double of $675 reported in 2009. On average, college graduates relying on student loans are leaving schools with $29000 in debt.
The matter of increasing student loan debt also remained under discussion during the 2020 presidential campaigns.
Enacted on March 27, The CARES act student loan forgiveness law named CARES allowed the US secretary of Education, Betsy DeVos, to cut interest rates on federally held student loans for two months as a part of the Coronavirus relief package.
After that act, a coalition of over 60 advocacy groups emphasized the congress to annul student debt in the next coronavirus stimulus package.
The Debt Collective
Recently an organization named the “Debt Collective” initiated a movement to convince people to stop paying student loan debts.
- During the movement, dozens of people ignited their student loan bills and demanded the cancellation of loans for free education.
- Apart from these organizations and activist groups, Sen. Bernie Sanders and Sen. Elizabeth Warren also pledged to terminate the student loan debt in America.
However, the announcement of Joe Biden as President-elect created hope in students and activists. They think that Biden’s administration might take the initiatives required to address student loan debt in the country.
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Final Word: Student Loan Forgiveness
In the past few years, student loan debt has risen dramatically. The average undergraduate now graduates with about $30,000 in loans, and that number is growing every day.
Politicians have taken notice of this crisis and are trying to do something about the need to cancel student loans. All we can do is keep fighting and making our voices heard until students get their debts deferred.