Americans have been predisposed to thinking that all education is good education and to get educated at all costs. Now some of this rhetoric is changing and, in a lot of those cases, to the opposite extreme favoring inexpensive or free self-paced education through online courses and platforms like this. With most things in life, there is a healthy balance, though, as there are a lot of professions that you wouldn’t want people winging it to use platforms like these to educate themselves. Think about the engineer that designed your favorite ride at a theme park, the doctors who perform open-heart surgery, or even the technicians who run high voltage wiring throughout your city. There are many professions for which you need a linear path of specialized training to become a subject matter expert. The challenge, though, is that our attention spans have greatly diminished. When there are so many possible options, it typically leads to inaction.
So figuring out what you are going to focus on is key, whether when developing a vision for your life or committing to becoming world-class at a certain trade. I believe this lack of focus has led us to the student loan crisis we all see unfolding today.
Over the last year and a half, we have seen a student loan repayment hiatus of sorts.
Whereas both principal and interest payments were halted in March 2020, extending through December 2020, then to January 2021, and now through September 30th. There are talks about extending this student loan moratorium into 2022, which would mean that those with federal student loans had at least two years of no payments on principal or accruing interest on their loans.
In order to understand the scale of this, the Federal Reserve Bank of New York, “According to the latest Quarterly Report on Household Debt and Credit, stated that outstanding student loan debt stood at $1.58 trillion in the first quarter of 2021.”
That’s trillion with a T.
Many have had hopes with the new regime that this would be partially or fully forgiven and that going-forward education would be a public service of sorts allowing for the cost of higher education to be greatly reduced or eliminated.
According to an article by the Wall Street Journal, “Five months into his term, President Biden has resisted calls from fellow Democrats and activists to cancel most of America’s $1.6 trillion in federal student-loan debt in one swoop through an executive action.”
According to Business Insider, this student loan debt is stated as a slightly higher figure; “Forty-five million Americans have a $1.7 trillion student-debt burden in the country.” This means that almost 14% of the U.S. population carries student loan debt!
The full student loan debt forgiveness has seemed to be tabled for now as this looks to be more of a targeted effort for balances at or below $10,000 as well as for certain groups like those who are disabled and those who have been defrauded by schools like ITT Tech.
According to an article by NerdWallet, “That amount could wipe out debt completely for nearly 15 million borrowers who owe $10,000 or less, according to federal data. The majority of student loan borrowers (roughly 67%) have more than $10,000 in debt.” This, of course, would depend upon which groups this forgiveness would be extended to.
As more information has emerged, it looks like the amount that could be forgiven would be based on your income and the type of degree that the debt is attributed to, as well as being federal, not private student loan debt.
Much of the provisions are geared toward undergraduate student loan debt. As stated by NerdWallet, “Graduate student loans — for which the average student debt is $71,000, according to the National Center for Education Statistics” would not qualify for debt forgiveness.
Where does this leave you though?
Whether or not there is a partial forgiveness of these loans, how should you plan, should you pay off your student loans, and when should this be a focus?
In the next episode, we are going to discuss how to expedite the process of paying these loans down and off once directive is given.
CTA: My call to action is to take a look at your own student loans; how much do you owe and to whom? What portion are federal student loans, and what portion are private?
https://www.nerdwallet.com/article/loans/student-loans/joe-biden-student-loans
https://www.newyorkfed.org/microeconomics/topics/student-debt
