By Taye Johnson
Have you heard about the recent updates to the student loan forgiveness program? Well, in January 2024, the U.S. Department of Education released the latest news about the SAVE income-driven repayment plan program. The program states that “borrowers enrolled in the SAVE income-driven repayment plan who originally borrowed $12,000 or less from the federal government would begin to see their loans forgiven in February 2024 if they made at least 10 years of qualifying payments,” according to Business Insider.
Why is this such a big deal?
In the United States, over 43 million Americans have student loan debt. The average American student's loan debt balance is up to $40,499 or more. That amount includes federal and private loan debt. Now, suppose we were to think about how that amount affects someone's monthly budget. In that case, it’s reported that the average monthly payment for student loans is $503, which can be a huge burden on many people's budgets.
Although the SAVE program would benefit a portion of borrowers, some will be left out. For borrowers who have recently started the process of paying their loans, the SAVE program is not available. This is because the program only applies to borrowers who have been making payments for at least 10 years. In addition, those who are currently in default on their loans will also be ineligible for the program. Some critics argue that this does affect the younger demographic of student loan borrowers, e.g., those under 25. The case can be made that the SAVE program benefits specific age groups versus others.
Overall, I think the SAVE income-driven repayment plan program is a great idea. It will help many people who are struggling to pay off their loans and give them a fresh start. The cost of college education has increased tremendously over the years. In the past, it was possible to pay for college with a part-time job or some help from your parents. Now, it's almost impossible to do that. The cost of tuition has increased so much that most people have to take out loans in order to afford their degree.
The rise in the cost of college education is a major problem. It’s becoming increasingly difficult for students to afford college. On top of that, the cost increase has occurred at a much faster rate than inflation, which means that students are paying more for their education than ever before. This factor can also make it harder for people to get a job after graduation because they have so much debt to manage.
How about if someone wanted to purchase a house? Or maybe start a family?
The mounting amount of student loan debt would make it challenging for those goals. The average American who wanted to own a home or who wanted to start a family would be affected by the rise in student loan debt. They would have less money available for down payments on homes, which could make it harder for them to qualify for mortgages. They might also have to delay having children until they are able to pay off their student loan debt.
As I reflect on the many reasons why the student loan forgiveness program is a great initiative, I also think about the economy. The student loan forgiveness program also has some benefits for the United States and the economy as a whole. The program is a way for the government to help students who are struggling financially. It can also be seen as an investment in the economy because it helps people get out of debt and start spending money in other ways. This would make it a way to stimulate the economy by giving people more disposable income. Who doesn't want to have more money to spend on the things that they love?
If you or someone you know qualifies for student loan forgiveness, consider checking out the latest information about the program at whitehouse.gov.