The government’s stimulus response to the pandemic could accelerate the trend for businesses to offer student loan assistance as a benefit.
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Phyllis Wintter has had student debt for over 30 years. At 67, she still owes about $ 48,000.
Now, she’s hoping the change could happen and that President Joe Biden will forgive her for her loans.
“It would be great if we could die without this debt,” said Wintter, who lives in Georgia.
But, she added, “$ 10,000 wouldn’t do it. I would still have $ 38,000, and I can’t afford it. “
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The chances of student debt cancellation becoming a reality have never been greater. President Joe Biden said during the election campaign that he was in favor of canceling $ 10,000 per borrower, and he has now asked his Education Secretary to prepare a report on his legal authority to eliminate until ‘to $ 50,000 for all.
Yet even among those who support the cancellation of the education debt, there is disagreement, particularly over the extent of the relief and who should get it. For example, some have launched the idea of forgive essential worker loans or only low-income Americans.
Higher education expert Mark Kantrowitz recently put a report together, comparing some of these different forgiveness plans and their potential impacts.
Here are a few of them.
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Forgiveness by age?
An increasing number of Americans are taking out student loans in their old age. And many of them cannot afford to pay.
One-third of student loan borrowers over 65 are in default, and half of those over 75 are late, according to a report par le Government Accountability Office.
Although Wintter avoided default, she said her student loans prevented her from qualifying for a mortgage. She recently tried again, but was refused.
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Phyllis Wintter
Source: Phyllis Wintter
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For financial reasons, she currently lives with her daughter but aspires to have a home of her own, especially at this point in her life.
“It would mean being able to be with myself for a while,” Wintter said.
Cancellation of student loans for people over 65 would cost the government an estimated $ 59 billion and affect 2 million people, according to Kantrowitz
The move would not be without precedent. The Swedish government, for example, cancels loans for all borrowers over 68, and the UK had a similar policy.
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By profession?
Others have proposed removing 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 social worker student loans would cost the government about $ 18 billion and provide relief to about 400,000 people.
The government would have to shell out about $ 117 billion to cancel teacher debt, which would leave about 3 million people debt-free.
The idea of forgiving doctor and nurse education debt also gained popularity during the pandemic. It would cost around $ 250 billion and likely affect around 1 million people.
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By income?
Some experts say any student debt relief should be targeted at low-income Americans, noting that many of those with student debt have high salaries.
About two-thirds of student borrowers in the United States earn less than $ 100,000 a year. It would cost the government about $ 938 billion to write off loans for everyone below that threshold, according to Kantrowitz’s analysis.
One-third of borrowers earn less than $ 50,000, and it would cost about $ 437 billion to just write off loans from these people.
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$ 10,000 or $ 50,000?
At the moment, the main point of contention among supporters of student loan forgiveness concerns the amount of debt to be eliminated.
If all federal student loan borrowers got $ 10,000 off their debt, the country’s outstanding education debt would drop 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 have their balances reset to zero.
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In contrast, canceling $ 50,000 for all borrowers would reduce the country’s outstanding student debt balance to $ 700 billion from $ 1.7 trillion. Meanwhile, the debt of 80% of federal borrowers, or 36 million people, would disappear entirely.
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.
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