If the student loan forgiveness bill is passed, then the following would go into effect. The Secretary of Education would have 6 months to cancel all outstanding student loan debt that the federal government provides, insured, or guaranteed. This bill would also grant the Secretary of Education the authority to purchase the outstanding loans from private lenders. The program would get private lenders to sell to them by paying off all unpaid portions of the debt including principal, interest and any late charges.
How it will affect the average American
43 million Americans owe money to the federal government due to student loans. The total amount of federal student debt is $1.4 trillion. To those Americans with just federal student debt, their loans would all be forgiven. This will allow those 43 million Americans to free up some of their income since the monthly student loan payments will be gone.
Are there other solutions
There are other ways to get your student loans forgiven:
- Public School Teach in certain areas that need teachers.
Several years ago, the federal government ushered in a program that would forgive the student debt of teachers in low-income areas. This program was designed to help new teachers fresh out of college and supply teachers to areas that desperately need them.
- Join the military
One of the classic ways to get a free education after the first GI bill was passed in 1944.
- Apply for a low-income repayments plan
There are several different repayments plans suitable for everyone. If debtors have problems paying each month, they can apply for a new repayment plan.
- Work for the government, non-profit or a public service organization
This is a lot like the first option only it is harder to find a qualified position, but it is doable.
Is this a good idea
In the short term, this student loan “Bailout” is a great idea. It will free up a decent chunk of change every month of those 43 million Americans. It will cost the government in at least $1.4 trillion in potential revenue and will require even more to purchase private student loan debt. This bill will not solve the underlining issues that have caused student loan debt to balloon to this size.
In the long term, this bill may cause more harm to both the American Economy and to all collegiate organizations. If the “bailout” bill is passed, it will cost the taxpayers far more than the $1.4 trillion that the current federal student debt stands at. This increase will come because the bill itself will not solve the problem but cause more. When the federal government bailed out the savings and loan industry in 1989, the stage was set for the growth of the bubble that leads to the 2008 bailout. Once a rescue has been made, another cannot be far behind. As long as colleges are a paid institution whether that be public or private, there will always be student loan debt.