Wait, only 32 people got their student loan forgiveness?
Wait, only 32 people got student loan forgiveness?
Here’s what you need to know – and what it means for your student loans.
A new report shows that in the history of income-tested repayment plans, only 32 people have ever benefited from a student loan cancellation. It is not a typo. Literally 32 people. According to latest statistics on student loan debt:
- There are 45 million student loan borrowers.
- Collectively, they owe $ 1.7 trillion in student loan debt.
- 8 million student loan borrowers are currently enrolled in an income-based repayment plan.
- 2 million student loan borrowers have been paying off student loans for over 20 years—and have not obtained any student loan cancellations.
- Only 32 of them received a student loan forgiveness as part of an income-based repayment plan.
Why? The National Consumer Law Center and the Student Borrower Protection Center say, among others, that student loan services have not helped borrowers adopt the right income-oriented repayment plans. Therefore, student loan borrowers always pay off student loans when they they could have benefited from a student loan cancellation.
An income-based repayment plan, which first became available to student loan borrowers in 1995, bases your monthly federal student loan payment on your discretionary income, family size, and credit status. residence. There are four types of Income Based Repayment Plans: Income Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) ) and Income Based Reimbursement (ICR). Here is the Student Loan Cancellation Promise: After 20 years (undergraduate student loans) or 25 years (graduate student loans) of monthly student loan payments, you can get a student loan cancellation for your student loan balance. .
However, despite this promise, 2 million student loan borrowers have paid federal student loans for at least 20 years and have not received a student loan waiver. Whether it’s being enrolled in a suboptimal student loan repayment plan, bad advice from a student loan officer, or a confusing student loan repayment system, some student loan borrowers don’t. are not relieved. A positive point: the new stimulus bill makes student loan cancellation of your tax-free student loan balance until December 31, 2025. Although most borrowers will not qualify for the student loan exemption by 2025, Congress has the option of extending the tax-free student loan exemption or making student loan exemption permanently tax-exempt.
Student loan borrowers missed student loan cancellations
Widespread mistakes and bad actions on the part of student loan officers disproportionately harmed low-income student loan borrowers, caused student loan borrowers to miss student loan cancellations, and exacerbated the report, according to the report. gender and racial disparities. The authors argue that:
- Financially Suffering Low Income Borrowers: Student loan managers have consistently pushed borrowers to adopt repayment plans rather than income-oriented. Forbearance does not lead to student loan cancellation, so low-income borrowers in particular were left with a more expensive student loan repayment option.
- Student loan officials did not communicate correctly: Navient, one of the nation’s largest student loan services, reportedly failed to communicate with student loan borrowers about the need to recertify income each year to get the most accurate monthly student loan payment. The Consumer Financial Protection Bureau (CFPB) found that 6 in 10 student loan borrowers missed deadlines to recertify their income each year. As a result, student loan borrowers did not remain enrolled in income-tested repayment and were not eligible for their student loan cancellation. A judge recently ruled that Student loan borrowers misled by Navient.
- Generalized student loan management errors: Student loan managers are said to have engaged in “delays in processing illegal documents, inaccurate refusals, lost documents and insufficient information or advice.” As a result, student loan borrowers may have lost money or missed their student loan cancellation.
Student loan cancellation: what it means for your student loans
The report offers four solutions for fixing student loans and canceling student loans:
1. Consider income-based repayment
The accuracy of all student loan accounts should be reviewed to ensure that all student loan borrowers who qualify for student loan cancellation can get it.
2. Focus on low income student borrowers
Cancellation of student loans should be done in a fair manner and should focus on the needs of the most vulnerable student borrowers.
3. Cancel student loans for all borrowers after 20 years
If you have student loan debt after 20 years, the US Secretary of Education should write off all your student loan debt.
4.Set income-driven repayment plans
Simplify student loan repayment so that student loan borrowers on an income-tested repayment plan can get their student loan canceled. President Joe Biden has a student loan plan to make income-based repayment more affordable and get student loan cancellation for more student loan borrowers.
Pay off student loans
As you navigate your way through student loan repayments, here are a few potential options to consider: