About 35 million scholars attending higher education institutions will get an application next month that will allow many of them to pay off their student loans. For 8 million borrowers, the procedure is already underway.
The compromise comes after President Joe Biden on Aug. 24 outlined a three-part plan to ease the debt burden of $1. 7 trillion in federal student loans. whom the government considers “most threatened by non-payment or default once bills resume” and organizes a new income-based payment plan to reduce monthly bills in the long term.
For the 26 USC college students who get federal loans, like junior philosophy, politics and law student Andrew Lutz, this plan will be a welcome relief.
“It’s cash that I would have to pay with my own career for the next five to 10 years or cash that my parents would have to withdraw from the house,” he said. “It will partly reduce the time, adding interest, it would have to take to repay the loans. “
By canceling debt of up to $10,000 to $20,000, Lutz said he believes the forgiveness plan gives more for the future.
“It also gives me more peace of mind because I’m not specialized in STEM,” he said. “Even though there are a lot of features for me after college, I don’t feel like I have to find anything that’s going to be super lucrative right after school. “
Victor Falcon, a first-generation sophomore in business administration, said the plan “makes a huge difference” in his resolve to pursue a fourth year at USC instead of completing his college studies after three.
Student loan debt is the current category of customer debt in the United States, time only for loan debt and higher than credit card and auto loan debt. California has the largest contribution to this debt segment, totaling $141. 8 billion for a combined population of students and graduate students.
“In fact, I feel like I’m getting a better deal right now in school,” Lutz said. “It seems that if you need to get an education, you have to go into debt. “
While the plan is helping existing USC scholars manage their debt, some recommend that the school still want to do more to increase its accessibility. College attendance in the 2022-23 school year is estimated to charge $63,468 for tuition alone, 53% higher than the national average of $41,568.
“USC needs to proclaim itself as a leading establishment. . . tied with Ivy League schools,” Falcon said. “Many of those schools are lowering their tuition rates and ensuring flexible tuition for all families under $100,000. “
In April 2022, Bloomberg reported that the average cost of tuition at an Ivy League school decreased by about 5% on average, adjusted for inflation. While the University of Pennsylvania increased its tuition rates by 4%, it increased its cash aid by 5. 25%. . Earlier this month, Princeton University expanded its aid program by offering free tuition to academics from families earning less than $100,000.
USC’s most recent step into need-based investing came in February 2020, when it committed more than $30 million toward canopy tuition for families earning less than $80,000 a year.
“[The University] wants to make monetary aid more accessible, more efficient, especially to succeed with first-generation scholars who are new to this process. Also, be more generous with their help or keep prices low,” Falcon said. Let’s say you’re a freshman, USC [could] guarantee that the prices to come here are fixed. “
Meanwhile, others say that while the policy can help USC students, it diverts budget from the spaces that need it most.
“It’s going to help places like USC, but there are possibly better tactics to spend the budget of some and the other people who are going to suffer,” said Robert Dekle, professor of economics at Dornsife’s Faculty of Letters, Arts and Sciences. [With a degree], they’re going to pay you through the market, it’s just an investment in yourself. “
While California has the highest point of student loan debt, it also has the third-lowest average student loan debt, at $21,125. Sixty-five percent of Americans don’t attend college, yet the pardon plan will charge taxpayers about $400 billion over 10 years.
“Use the money for early formative education, and there will be more impact on the source of income equality,” Dekle said.
Falcon “strongly disagrees” with the concept that the plan would likely not help low-income families because it is for families earning less than $150,000.
“I feel like it’s absolutely a step in the right direction,” he said. “I think Senate debt relief deserves to increase the amount. I’m more in favor of a $50,000 refund. “
For years, progressive members of Congress have lobbied for the cancellation of $50,000 in student loan debt. After the economic fallout from the coronavirus pandemic, which affected borrowers’ ability to repay their loans, Congress and the Trump and Biden administrations responded with a historic student attitude. Loan relief and pauses in federal student loan payments.
Looking ahead, Falcon and Dekle said the long-term purpose of achieving greater equity in education isn’t based solely on the student debt factor.
“I know that canceling student debt is not the ultimate solution,” Falcon said. It’s nothing to move on to college and pursue your dreams. Here in the United States we pay an exorbitant sum. “
Dekle had doubts about the longevity of the plan and the effectiveness it entails, asking whether administrations “will have a $10,000 rebate program on an ongoing basis. “
“Education has externalities,” Decle said. There’s the question of whether this individual [forgiven a student loan] gets so many advantages at the expense of other programs. . . My feeling is more balanced toward desires bigger than that. “
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