Overwhelming student debt has quickly become one of the most significant problems plaguing the next generation of young people and simultaneously holding back the overall economy.
The pandemic pause has given many American struggling with student loan debt a reprieve. Still, with those breaks set to expire in August, things could get difficult once regular student loan payments resume.
One of the most common solutions presented by political leaders has been some form of student loan forgiveness. The United States Supreme Court is set to rule on whether that is legal within the next few months.
With more than 40 million Americans waiting for the government to issue assistance, now is the time to understand what is happening with student loan debt in this country.
Student Loan Forgiveness Plan
The currently proposed plan for student loan forgiveness that the United States Supreme Court is reviewing includes complete forgiveness for up to $10,000 in federal student loans for anyone making less than $125,000 or $250,000 for a household.
In addition to that $10,000 discount, there could also be an additional $10,000 in forgiveness available for eligible borrowers who received a Pell Grant as part of their student loan package.
Taking these numbers as they are currently constructed, student loan forgiveness would apply to approximately 3.5 million Californias, with two-thirds of those eligible for the maximum amount.
Locals Views on Student Loan Forgiveness
Like any political issue, there are strong feelings on both sides of the student loan forgiveness debate. Here in California, polls show that six in ten residents support some policy for student loan relief. That support is stronger in lower income ranges, and there tends to be less forgiveness support as we move into higher tax brackets.
We find strong support for student loan forgiveness among residents that never attended college or attended but failed to graduate. There is also support in many minority communities.
The primary reason that so many Californians favor student loan debt forgiveness is that excessive student loan debt is often seen as holding back the economy by making it nearly impossible for young people to buy a home. Reducing the amount of outstanding student loan debt would also make economic mobility more feasible.
Reducing the Cost of College Education
In addition to the student loan debt forgiveness plan currently being discussed, President Biden also has plans to erase defaults on student loans from credit reports, reduce repayment plans, and even increase Pell Grant availability for future generations.
With so many different options to make college education more affordable, it’s no surprise that several different viewpoints are coming at this issue from different directions. However, with the currently paused student loan debts set to resume in just a few months, the timing has never been more critical to figure out how we as a country will move forward on this issue.
And regardless of how you feel about this issue, there is no doubt that it will affect debt and collections here in California for many years to come.
