A college degree can provide you with the tools you need to achieve economic stability. However, as with most worthy investments, finishing higher education comes with hefty costs. Recent Federal Student Aid figures reveal that the total outstanding federal loan debt has reached $1.6 trillion.
With debt burdening millions of Americans, national platforms have raised debates on student loan forgiveness payment solutions. This article will go through government leader proposals and repayment options when forgiveness is not possible.
Student Loan Forgiveness Proposals
Senators and presidential candidates Bernie Sanders and Elizabeth Warren suggest canceling student loans for 100% and 95% of borrowers, respectively. Both government leaders would fund their proposals through new taxes.
Sanders’s proposal seems more favorable for students; he wants to forgive all outstanding federal and private student loans. Additionally, he moves to waive all requirements and make all borrowers eligible for student loan discharge.
Moody’s Investors Service assessed the implications of student loan cancellation. These are some of its benefits:
- A slight increase in household spending and investment
- The formation of more businesses and households
- Long-term homeownership growth
However, below are some of the drawbacks.
- Lost revenue: The federal government would lose an estimated $85 billion in forfeited loans, interests, and other fees.
- Doubtful intentions: Some student borrowers might end up borrowing more money, knowing that the government will waive their debts.
- Increased loan motivation: Future students may apply for higher loans that the government may not forgive. This scenario will leave more people burdened with massive debt.
Forgiving 100% of student debt may not be the ideal solution for the country today. The risks far outweigh the benefits.
This situation leaves borrowers with a daunting question: What are their repayment options?
Student Loan Repayment Options
While not everyone can qualify for loan forgiveness, you can apply for it. To pursue a forgiveness option, check your eligibility here.
As we may not experience universal student loan forgiveness soon, it’s essential to understand your repayment options.
Student Loan Refinancing
Through student loan refinancing, a private lender pays off your debt in exchange for a new loan. With the correct payment solutions, you can enjoy lower monthly rates. You can use your savings for other investments.
Student Loan Consolidation
Student loan consolidation combines various debts with different rates and terms into a single loan. The result is a convenient single-payment plan. You can achieve consolidation in two ways: a direct consolidation loan for federal loans or a financing plan from a private lender.
Income-Driven Repayment Plans
If your federal student loans far exceed your income, an income-driven repayment plan is ideal for you. In most cases, student loans qualify for at least one of these solutions.
Find the Best Repayment Option for You
At Chipper App, we empower student borrowers to make the best financial decisions. With our experts on your side, you don’t have to guess which option is ideal for you. Create your free account now to secure your financial future.