Financial footprint of student loan debt
Student loan debt is causing borrowers to put financial goals on hold, even as expanded forgiveness and repayment options offer help to some.
On Wednesday, the Department of Education published its plans to alter the regulations on debt collection for federal student loans, allowing it to waive balances for borrowers who owe more than they did when they began paying, those who attended for-profit technical schools that have been closed, and others. Those changes are in addition to actions the administration took last year to make public service loan forgiveness and income-driven repayment options more accessible and to implement its Save plan, which has reduced undergraduate loan payments to zero a month for 4.5 million people and to less than $100 for another 1 million.
Financial planner Ethan Miller, founder of Planning for Progress, said about half of his clients are financially affected by student loan debt. Many have benefited from the Save plan, including a 60-year-old rabbi who, after being in repayment for 15 years, had $55,000 forgiven, allowing her to pay off credit card debt and save for retirement, he said. Another, a 38-year-old educator, saw his loans forgiven and is now planning for a sabbatical and a move across the country with his husband, Miller said.
The recent $70 billion loan proposal by the Biden administration hasn’t changed anyone’s plans yet, however. Given that the first, wide-ranging forgiveness package Biden implemented was blocked last year by the Supreme Court and that the administration has now been sued by numerous Republican states over the current plan, “it really is a wait-and-see,” Miller said.
“I think we’ve all been burned,” he said, regarding the massive program that would have
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