Forgiving $ 10,000 in student debt would boost the economy
President Joe Biden has asked the Education Secretary to review his legal authority to write off certain amounts of student loan debt. But while the country awaits this review, a new analysis shows the impact that the cancellation of part of this debt could have.
A number of proposals have been thrown out, but $ 10,000 per person is an amount Biden has indicated he would consider forgiving.
Federal loans held by the federal government represent $ 1.3 trillion, or 76% of student loan debt.
New analysis from Student Loan Hero reveals that 34% of borrowers could see all of their direct federal student loans – the most popular type of student loan – wiped out as part of the plan Biden discussed. Another 20% of borrowers would see their balance reduced by at least half.
Student loan counselors benefit everyone under the proposed plan.
“Basically, when you write off student debt for a large number of Americans, you are helping to boost their personal finances and at least boost local economies and hopefully nationwide as well,” Andrew said. Pentis from Student Loan Hero.
Biden has said he prefers not to take executive action and instead wants to work with Congress to write off student loan debt. He also said the government should not write off the debt of people who attended Ivy League schools.
“At this point, it still seems like it’s a divisive issue at a time when the president wants to unite the country, so I don’t see him rushing to do it,” Pentis said. “Another reason this could be delayed is that the current federal student loan repayment freeze is scheduled to last until September.”
The Department of Education has already implemented more targeted debt cancellation policies for defrauded students and disabled veterans.