The government’s stimulus response to the pandemic may accelerate the trend of companies offering student loan assistance as a benefit.
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Phyllis Wintter has had student debt for over 30 years. At age 67, he still owes about $ 48,000.
He now hopes change can come and that President Joe Biden will forgive his loans.
“It would be great if we could die free of that debt,” said Wintter, who lives in Georgia.
But, he added, “$ 10,000 wouldn’t. I’d still have $ 38,000 and I can’t afford it.”
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The odds of student debt forgiveness becoming a reality have never been higher. President Joe Biden said in the campaign that he supported the cancellation of $ 10,000 per borrower and that he has now asked his secretary of education to prepare a report on his legal authority to end up to $ 50,000 for to everybody.
However, even among those who support the cancellation of educational debt, there are disagreements, particularly about how big the relief should be and who should get it. For example, some have raised the idea of forgiving loans from essential workers or just low-income Americans.
Higher education expert Mark Kantrowitz has recently produced a report that compares some of these different forgiveness plans and their possible impacts.
Here are some of them.
Forgiveness for age?
A growing number of Americans are lending student loans to old age. And many of them cannot afford the payments.
One-third of student loan borrowers over the age of 65 are defaulted and half of those over the age of 75 are left behind, according to a report from the Government Accountability Office.
While Wintter has avoided delinquency, he said his student loans have made it impossible for him to qualify for a mortgage. He recently tried again, but was denied.
Phyllis Wintter
Source: Phyllis Wintter
For economic reasons, he currently lives with his daughter, but wants to have his own home, especially at this point in his life.
“It would mean being able to be with myself for a while,” Wintter said.
Canceling student loans for people over 65 would cost the government about $ 59 billion and affect 2 million people, according to Kantrowitz
The move would not be unprecedented. The Swedish government, for example, forgives loans from all borrowers over the age of 68 and the UK used to have a similar policy.
By profession?
Others have proposed eliminating loans from people in certain professions where the contribution to society is high, as well as the debt burden.
For example, Kantrowitz found that canceling student loans for social workers would cost the government about $ 18 billion and provide relief to approximately 400,000 people.
The government would have to shell out about $ 117 billion to forgive teachers ’debt, which would leave about 3 million people debt-free.
The idea of forgiving the educational debt of doctors and nurses has also gained popularity during the pandemic. Doing so would cost about $ 250 billion and would likely impact about a million individuals.
For income?
Some experts argue that any forgiveness of student debt should be directed at low-income Americans, noting that many with educational debts have high wages.
About two-thirds of student loan borrowers in the United States earn less than $ 100,000 a year. According to Kantrowitz’s analysis, the government would cost about $ 938 billion to clear loans for everyone below that threshold.
One-third of borrowers earn less than $ 50,000 and it would cost about $ 437 billion to forgive only these people’s loans.
$ 10,000 or $ 50,000?
For now, the main point of contention among proponents of student loan forgiveness is the amount of debt that should be eliminated.
If all federal student loan borrowers were to be forgiven $ 10,000 of their debt, the outstanding education debt in the country would fall to about $ 1.3 trillion, from $ 1.7 trillion, according to Kantrowitz.
And about a third of federal student loan borrowers, or 15 million people, would see their balances reset to zero.
Canceling $ 50,000 for all borrowers, on the other hand, would reduce the outstanding balance of the country’s student loan debt to $ 700 billion, from $ 1.7 trillion. Meanwhile, the debt of 80% of federal student loan borrowers, or 36 million people, would have disappeared completely.
Even under this more generous plan, not everyone would be happy.
One-fifth of federal student loan borrowers owe more than $ 50,000 and about 7% of borrowers owe more than six figures.