Guide to President Biden’s Plan for Federal Student Loan Debt Relief
[Note: the following post is based on the official White House release from August 24, 2022, entitled “FACT SHEET: President Biden Announces Student Loan Relief for Borrowers Who Need it Most”]
What to Know About the Student Loan Debt Relief Plan and How it May – or May Not – Benefit You?
Since 1980, the total cost of both four-year public and four-year private colleges has nearly tripled, even after accounting for inflation. Federal support has not kept up: Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third. That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree. According to a Department of Education analysis, the typical undergraduate student with loans now graduates with nearly $25,000 in debt.
The skyrocketing cumulative federal student loan debt — $1.6 trillion and rising for more than 45 million borrowers — is a significant burden on America’s middle class. Middle-class borrowers struggle with high monthly payments and ballooning balances that make it harder for them to build wealth, like buying homes, putting away money for retirement, and starting small businesses.
For the most vulnerable borrowers, the effects of debt are even more crushing. Nearly one-third of borrowers have debt but no degree, according to an analysis by the Department of Education of a recent cohort of undergraduates. Many of these students could not complete their degree because the cost of attendance was too high. About 16% of borrowers are in default – including nearly a third of senior citizens with student debt – which can result in the government garnishing a borrower’s wages or lowering a borrower’s credit score. The student debt burden also falls disproportionately on Black borrowers. Twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt.
Read the entire story about Student Loan Debt Relief at Splash Financial.
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Do You Qualify for Student Loan Debt Relief?
If you don’t qualify for Student Loan Debt Relief, you may qualify for a lower interest rate. Fixed rates between 2.59-8.44% APR
You could end up with a lower monthly payment or paying off your student loan debt sooner. Either sounds like a great option, right?
1 To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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