US Student Loan Forgiveness Makes Borrowers Wait for Vacation, Medical School

US Student Loan Forgiveness Makes Borrowers Wait for Vacation, Medical School

By Kanishka Singh

WASHINGTON (Reuters) – Americans with hefty college debts welcomed U.S. President Joe Biden’s announcement on Wednesday that he would forgive $10,000 in student loans, and some shared the hope they could spare hours. extra work and maybe taking a vacation or going back to school.

“I would have no qualms about planning a trip or going on vacation,” said John Paul, 49, a restaurant manager in Washington DC, who said he borrowed money for his son’s tuition. “Before, it would be in the back of our mind that we have this debt hanging over us. Now we’re a little relieved.”

He was interviewed shortly after the Biden administration announced it would extend a pause linked to the COVID-19 pandemic in paying off student loans until the end of the year, forgiving $10,000 in student debt for borrowers whose income falls below $125,000 a year. , or $250,000 for a couple.

Paul said the relief will cut his debt in half.

Vincent Joseph, who graduated in 2019 and currently works at a Washington-based lobbying firm, said he was happy to hear that his remaining $6,500 in debt is likely to be relieved.

“There could be a whole next generation that doesn’t have to work overtime or additional jobs to pay off that debt,” he said, noting that he had taken a job at college to pay off his loans.

“Many people work extra jobs and as a result they commit to spending time with friends and family because they are worried about their debt,” he said, calling it a small step in the right direction.

Millennials, or those born between 1982 and 2000, “have significantly more student debt, lower levels of ownership, and less net worth than previous generations,” according to research published before the COVID-19 pandemic by the Government Accountability Office. nonpartisan.

Alexis Horton, 20, a BS in biology at Howard University, said the announcement comes as a relief to those planning further studies.

“As a biology student who wants to go to medical school, I accumulate a lot of loans at school, so hearing that I could get $20,000 or $10,000 (off) sounds pretty good,” Horton told Reuters.

Supporters of student debt relief welcomed the move but also urged the Biden administration to do more to address systemic problems.

Kyra Taylor, an attorney at the National Consumer Law Center who focuses on student loans, described the move as “life-changing for millions of Americans.”

The White House estimates that its debt relief plan could lead to as many as 20 million borrowers having their debt canceled completely. About 43 million Americans have federal student loan debt, according to educationdata.org.

Taylor, however, added that the plan does not do enough to help borrowers with larger balances, like many black Americans, who experts say face heavy debt.

“The government must take additional steps to address the racial inequalities that the student loan system has exacerbated, and that means that black Americans, and especially black women, are saddled with more student loan debt just to access the same opportunities as others,” she told Reuters. .

The government said it is also forgiving up to $20,000 in debt to federal Pell Grant recipients, about 6 million students from low-income families, and is proposing a new rule that protects some of the income from payment plans and forgives some loan balances after 10 years. of refund.

(Reporting and writing by Kanishka Singh in Washington; additional reporting by Julio-Cesar Chavez and Matt Mcknight; editing by Heather Timmons and David Gregorio)

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