The Supreme Court struck down the Biden administration’s plan to eliminate as much as $20,000 in federal student debt for millions of borrowers. The forgiveness plan would have wiped away an estimated $430 billion in loans from the government’s books…
Once payments resume, the typical student-loan payment will be between $210 and $314 a month… Overall, more than 40 million borrowers would have qualified for loan forgiveness through a required application…
More than 43 million people collectively owe $1.6 trillion in federal student-loan debt as of March 31, according to the Education Department. The types of loans include Direct Loans, Federal Family Education Loans and Perkins Loans. … The largest cohort in the Education Department’s data is borrowers ages 25 to 34, and nearly a quarter of them owe more than $40,000. In the next-largest cohort, of borrowers ages 35 to 49, more than one-third owe more than $40,000. … The bipartisan debt-ceiling deal President Biden signed into law this month mandates that student-loan payments resume by Aug. 30. …[end quote]
The burden of student loans falls hardest on people in their prime career and family formation years. It’s shocking to see that 1/3 of all households in the lowest income range have student loan debt. Many are probably young people whose income is low because they are just starting their careers. But many are probably people who went into debt to study subjects that did not equip them for higher-paying jobs. Some are carrying substantial student loan debt well into middle age and beyond.
The Macroeconomic impact of this is huge. Millions of people won’t be able to buy homes or start families because their income will be directed toward paying off this debt for many years to come. The scale of the debt (over $1 Trillion) will impact the real estate market because people who are paying hundreds of dollars toward debt repayment won’t be able to pay toward rent or a mortgage.
Student loans can’t be easily discharged in bankruptcy. The concern of the lenders was that new graduates would simply declare bankrupcy and stiff the lenders.
There is a new process to discharge student loan debt in bankruptcy but it isn’t easy. It’s so complicated that the applicant would probably need a lawyer to go through the process. It’s on a case-by-case basis and wouldn’t work for millions of people at once.
What follows is a list of ways to eliminate your federal student loan balance aside from paying in full. (Rules are different for private student loans that do not come from the government, and they’re generally much more strict.) If you know anyone who has student loans refer them to this article.
Not all student loan debt is federal. Some is from private lending. The total is $1.77 Trillion and rising. Today’s Supreme Court ruling only applies to federal student loan debt.
Families have invested an immense amount of money into education but much of it may be wasted. Around 40% of undergraduate students leave universities and colleges every year. On average, these students are expected to earn $21,000 less than college graduates, ultimately making 35% less than their counterparts per year.
The Macro impact of the Supreme Court ruling will be greater wealth inequality. Many of the college dropouts come from poorer families and run out of money before graduation. Their investment in education will burden them for years.