President Joe Biden is a big fan of federal student loan forgiveness. He has run for the presidency on the pledge, and his administration appears poised to launch a loan forgiveness program this summer.
According to a study by Intelligent LLC, the Biden administration will forgive up to $10,000 in state student loans per borrower. The announcement of the new policy seems imminent.
At the same time, student-loan borrowers are following the issue closely, with many building on the president’s promise by increasing student loans since he took office.
Intelligent has taken a close look at the number of colleagues who have taken out federal student loans since January 2021.
What they found was surprising: 86% of 1,000 students surveyed said they had recently taken out a student loan, based largely on the president’s promise to forgive student loans.
In addition, the study found that. , ,
- Almost one in three say they are unlikely to continue in school if Biden fails to deliver on his promise
- The majority remains confident that the President will forgive at least some of the student loan debt
- Nearly one in three borrowers who identify with the Democratic Party are unlikely to vote for Biden in the next election unless they get a loan forgiveness
- 70% say they are confident (35%) or somewhat confident (35%) that they will forgive any borrower $10,000 in student debt. An overwhelming 90% say this would be very helpful (60%) or somewhat helpful (30%) to them personally.
- 71% are very confident (30%) or somewhat confident (41%) that Biden will exceed his initial campaign promises and forgive most or all federal student loan debt.
playing with fire?
With no formal announcement, money pundits wonder whether borrowers are taking a risk by borrowing on a politician’s campaign of promises.
“Borrowers who took out student loans because they believed they were being forgiven took a beating,” said Leslie Tayne, founder of the Tayne Law Group in New York.
“Student loan forgiveness is not guaranteed until signed into law or mandated by executive order — and even then, we can expect protracted legal challenges.”
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Who qualifies for student loan forgiveness is another high-risk proposition for recent borrowers.
“I would assume that a large proportion of these people would have gone to school and taken out loans regardless of loan cancellation to further their education,” said Meagan Landres, an advisor at Student Loan Planner and a certified student loan professional.
“But this cancellation would likely be for those who have already borrowed and graduated. So if you borrowed money for the sole purpose/anticipation of loan cancellation, that was a bad decision as this may not apply to you.”
Why should colleges be off the hook?
One question making the rounds on social media, on backyard patios, and in diners and bars across the US is whether or not student loan forgiveness is fair to Americans who have never taken out student loans.
It’s complicated, money experts say.
“Student debt relief is fair, although not every American bears the burden,” Tayne said. “For several years, many have described the student loan landscape as predatory, leaving many borrowers with debt they could never pay off on their own.”
However, mere debt relief will not solve the problem in the long term. “What would be fair would be for the Biden administration to pass legislation that regulates the cost of higher education and reduces the number of interest-borrowers that have to be paid,” Tayne noted.
Landres agrees with this opinion.
“It’s a complex question where you can argue either way,” she said. “Is it fair to those with no student loans or those who have already paid them off? No it is not. But could it be life-changing for a low-income person who doesn’t have a degree and is struggling to make ends meet? Yes, it could.”
The bigger question is what is being done to fix the front end of student loans, where colleges and universities routinely charge tuition that historically increases well ahead of inflation.
“Student loans are a symptom of bigger problems,” Landres added. “Foreclosure on a student loan is a small band-aid for a system that’s bleeding dry.”