What Biden’s Relief Program Means for Kentucky Student Loans Borrowers | New
President Joe Biden’s recently enacted $ 1.9 trillion coronavirus relief program is expected to make it easier to cancel student loans. That goes for the two existing avenues of debt cancellation and the $ 50,000 that some Senate Democrats are pushing Biden to erase with the stroke of a pen.
“It sort of resolves some of the issues with canceling existing student loans and sets the stage for whatever is on the horizon,” said Erin Klarer, vice president of government relations at Kentucky Higher Education Assistance. Authority.
A provision in the US bailout makes student loan cancellation a tax-free event until 2025, potentially paving the way for broader relief in the future.
Some of Biden’s Democratic allies, including Senate Majority Leader Chuck Schumer of New York, have urged the president to write off up to $ 50,000 in debt per borrower, pointing to precedents set by former Presidents Barack Obama and Donald Trump. The US Department of Education, an agency under Biden’s jurisdiction as president, owns more than 90% of the country’s roughly $ 1.5 trillion in outstanding student debt.
That said, Biden opposed the cancellation of up to $ 50,000 per borrower, saying the government should not extend debt forgiveness to students who have attended elite private colleges. This description, however, does not accurately describe the majority of borrowers, especially those in Kentucky.
“Most people who borrow, especially in our state, aren’t really big amounts. It’s not the case that these are just elite college students, ”Ashley Spalding, research director at the Kentucky Center for Economic Policy, recently told The Daily News.
Looking at Kentucky’s student loan situation, a substantial portion of Kentuckians who owe student loans have low incomes, Spalding said.
“We know that they often attend community colleges and public universities in our state, and many people who owe student loans have not been able to graduate, and often financial constraints are the reason,” he said. she declared.
Instead, Biden advocated up to $ 10,000 of debt cancellation per borrower, albeit through congressional legislation and not executive order.
This would wipe out the debt of nearly 15 million borrowers who owe less than $ 10,000. However, most student loan borrowers (around 67%) owe more than that, according to personal finance website NerdWallet.
Biden also proposed an overhaul of the ‘broken’ civil service loan forgiveness program, promising to create a simpler, simpler alternative that will provide $ 10,000 in undergraduate or graduate student debt relief. for each year of qualifying service, up to five years.
“People working in schools, government and other non-profit institutions will automatically be enrolled in this forgiveness program; up to five years of prior national or community service will also qualify, ”the official Biden website read.
“I have a feeling they’ll hit some kind of student loan forgiveness compromise,” Klarer said.
– Follow education reporter Aaron Mudd on Twitter @NewsByAaron or visit bgdailynews.com.