You're not the only one hoping for student loan forgiveness: 43 million Americans are dealing with federal student loan debt. And one poll says over 60% of Americans support erasing at least some student loan debt — even if they don't have any themselves.
And while the pause on federal student loans is saving Americans about $5 billion every month (thanks, pandemic), it’s still just that. A pause. And without forgiveness (or a seventh extension) payments will be due again in September.
Will student loans be forgiven?
Maybe. The Biden administration has already forgiven around $2 billion in student loans for borrowers who allege they were defrauded by their colleges. And advocates say broader student loan forgiveness is just one executive order away. Psst…attendees at a Congressional Hispanic Caucus meeting in late April say President Joe Biden signaled he’s open to canceling some student loan debt. And forgiveness was one of President Biden’s big campaign promises.
Why would anyone oppose student loan forgiveness?
Many critics say full forgiveness would be unfair. And since college grads tend to earn higher salaries than those who never attended college, opponents say forgiveness would mainly help the wealthiest Americans. Critics also argue that forgiveness would not bring a boost to the economy. Because the extra funds would likely go to savings, not spending.
And what are some of the pros for student loan forgiveness?
Some supporters say, while wealthy Americans do tend to have the biggest balances of education debt (hi, grad school loans), higher degrees do not necessarily guarantee higher incomes. Or the ability to manage repayments.
And if people are struggling to pay off student loans, they won't be the only ones paying the price. Because a portion of the population overburdened by debt is bad news for the economy. Read: They have less to save, spend, and invest while they're busy repaying loans. Forgiveness would mean more money flowing through the economy. Which benefits everyone.
So…do I have to repay my student loans?
TBD. The Biden administration hasn’t said ‘no.’ And the US Department of Education says it plans to address historical failures when it comes to federal student loan programs. So it’s still a possibility. But don’t bet on it.
A better idea: prepare your budget for student loan payments later this year. Here's how to plan your next move while the pause continues. And if loan forgiveness actually happens, you’ll get a nice savings boost. Cue that found money feeling.
President Biden has dropped hints that he’s open to canceling some student loan debt. Which would give us all a much-needed economic boost, even if you didn’t go to college or take on debt to get your degree.
Updated April 28 to include President Biden's latest hints about student loan forgiveness.
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