You Owe Me Something, What’s Your Price: Student Loan Debt
Updated: May 14, 2022
By Reagan Williams
(Source: Pexels/Karolina Grabowska)
Do you remember the now defunct ITT Technical Institute? ITT Technical Institute closed its doors in 2016 as one of the largest for-profit educators in the United States with 130 campuses in 38 states. In June 2021, the Biden Administration accomplished what many people yearned for- having their student loans canceled and forgiven. ITT Technical Institute was found to have made deceptive claims regarding their graduates and the success stories of their graduates' employment opportunities. Subsequently, the school was barred from accepting students during the Obama Administration.
Meanwhile, the Biden Administration forgave over 18,000 loans from students that attended ITT Technical Institute all resulting from claims made by students through the borrower defense program. This program provides loan forgiveness to some or all of an individual’s federal student loan. If a person feels that their school misled them or engaged in misconduct involving particular state laws, a person might be eligible for this program.
Can you imagine having your federal student loan debt forgiven if you felt you were defrauded by a college or university you attended? The Biden Administration canceling federal loans of more than $500 million is significant because it’s a step closer to addressing the claims made by individuals through this program. Overall, there are eight key things that the Biden Administration is focusing on during his term. Since Biden’s time in office, his administration has waived taxes on student loan forgiveness through 2025 with the American Rescue Plan Act. Additionally, Biden has proposed legislation to make community college free for all students with the American Families Plan.
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According to Bloomberg Wealth+ Equality, currently, there is an estimated 1.7 trillion in student loan debt in the United States, alone. This number encompasses 8.7 million Americans who are 50 and older that are still paying off their college loan debt. For many, student loans have become a burden due to the accrued interest and monthly payments impacting their essential bills such as rent, mortgage, cars, furthering one’s education and just their livelihoods. During COVID-19, people have appreciated the moratorium on most federal loan payments, interest and collections.
Recently, politicians are questioning that Biden's plan to cancel student loans is insane and feel that the policy is being criticized as a bad policy. President Biden has expressed that he will probably enact a plan that will relieve student loan debt. Reports are speculating that he will forgive student loan debt, roughly $10k per person. Despite what people may think, politicians feel this will exacerbate the student loan situation for Americans. Politicians believe it will encourage borrowers to be irresponsible for lending now and in the future. If the plan passes, critics predict that it will wreak havoc in an already chaotic market experiencing projected inflation in the fall which hasn’t been the case since the Carter administration. Another criticism is that the plan is regressive. The plan is thought to help adults that earn lower wages. While the Brookings Institution has found that most of the student loan debt is from the highest earners.
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As the Biden Administration figures out a plan, there are options for you if you can’t afford the loan payments. For instance, a person can look into general forbearance, which allows someone up to 12 months of forbearance at a time (up to three years in total). Another alternative to explore with your loan servicer is income-driven repayment plans. These plans set your monthly payments based upon a percentage of your discretionary income. If someone works in a public service job, they might be eligible for a Public Service Loan Forgiveness or Teacher Loan Forgiveness. Finally, whether you have a federal or private loan, looking into refinancing can be a viable option. No matter what happens, people need to be prepared and stay informed to see how higher education legislation will impact them.
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