Student loan debt forgiveness is a hot-button topic, thanks to the record $1.6 trillion student debt burden carried by US residents. The cost of college is only increasing, and more students than ever need to take out loans to get higher education. But will student loan forgiveness help with current debt? Let’s discuss the basics of this topic now.
Student Loan Debt Forgiveness Is Intended To Help With Current Debt
The short answer is “yes.” If you’re currently in student debt, student loan debt forgiveness is intended to help you.
It’s not intended just to help current or future students who may need to take on debt – but to help anyone who has taken out loans to pay for higher education.
There are a few different types of loan debt forgiveness that could be implemented. Some people want to make student loan debt dischargeable in bankruptcy – which has usually not been possible due to a law passed in 1998.
Some other proposals include direct payments of up to $10,000 or more to reduce debt burdens, or the forgiveness of remaining student debt for those who make payments for 10-20 years.
Forgiving Student Loan Debt Could Help Stimulate The Economy
Beyond the obvious financial relief for those who are burdened by high levels of student debt, another benefit of forgiving student loan debt is that it could help stimulate the economy.
Those who were burdened by high loan payments – averaging $393 per month – could spend this money on consumer goods, save to purchase homes, and save it for retirement, and use the cash to start a family, among other things. All of these uses would have a positive impact on the economy.
In other words, canceling $1.6 trillion in student debt means that those who previously had to repay this debt will be able to inject their cash into the economy – improving their own personal financial situations, and stimulating the economy in a variety of different ways.
This would be particularly helpful for borrowers with the lowest incomes, who are more likely to have taken out loans to go to school – and are now unable to save money due to high debt burdens.
Don’t Count On Debt Relief – Plan To Repay Your Student Loans
While there have been multiple bills for student loan forgiveness proposed by Senate Democrats, by Joe Biden, and by the initial COVID-19 coronavirus HEROES Act relief bill, none of these bills have been passed – and it’s not a good idea to bank on future debt relief when planning your financial future.
We recommend that you plan on repaying your loans. If future student loan forgiveness bills are passed, this is sure to help you repay your debt – but you should never include speculation about future legislation as part of the financial planning process, since there’s no way to know what will happen in the future.