Cancelling Student Loan Debt Will Significantly Improve Lives!
As of the publishing of this post, US President Joe Biden has not officially announced any plans to cancel any student debt yet; however, it’s an important global issue worth discussing, as it affects millions of people around the world.
This piece will not discuss any political leanings around the subject and will only focus on the issue itself. I will briefly summarize the potential resolutions that are currently popular in the USA and then share my own experiences and thoughts with student loans.
Three Potential Scenarios in the USA
To summarize, there are currently three potential scenarios that are popular among the US public. These are speculations only and are not official options presented by the US government:
- Cancel student loan debt up to $10,000;
- Cancel student loan debt between $10,000 and $50,000; and
- Cancel all student loan debt for everyone or all of it only for those with $50,000 or more of it.
In 2020, US President Joe Biden stated that he was open to the idea of cancelling student loan debt of up to $10,000. This was immediately met with requests to increase that amount, as many people have far higher amounts of student loan debt owing.
Subsequently, he also made his stance clear that he was not considering anything at the $50,000 level or more. However, it is still one of the three potential scenarios that is popular among Americans hoping for this type of debt forgiveness and relief.
It should be safe to say that options 1 and 2 above are more likely to happen and that there may be income thresholds and other eligibility conditions that need to be met in order for the relief to be granted, if and when a plan is approved and implemented.
Option 3 above is unlikely to happen and critics also point out that it would disproportionately benefit those of wealthier individuals, who may have graduate level degrees or those who went to more expensive colleges and universities.
Although the amount of debt forgiveness cannot be agreed upon, what can be agreed upon is that whichever option is approved, it will have a significant and positive impact on the lives of those carrying this burden.
Some individuals carry it for the rest of their lives, well into their later adult years, while many others end up defaulting on them. In both cases, individuals will continue incurring expensive compounding interest, fees, and penalties along the way. Due to the pandemic, currently the USA has paused student loan interest until August 31, 2022, and that date may be extended.
In the USA, student loan debt is very hard to discharge in bankruptcy, which means that even if someone declares bankruptcy, which will usually wipe out their credit card and other debt, the student loan debt has a high chance of still following them. There is additional criteria that needs to be met in order to allow for the discharging of student loan debt and most people will not qualify for it.
My Thoughts
I’m Canadian, so the outcome of this situation in the USA will not have a direct impact on me or other Canadians.
For comparison though, in Canada there have been previous discussions at the federal government level to cancel up to $20,000 of student loan debt and offer more lenient repayment options for those making $35,000 to $60,000 gross per year. These are not finalized or implemented yet.
And due to the pandemic, no student loan interest will be charged until March 31, 2023. Moreover, student loan debt in Canada is dischargeable in bankruptcy after 7 years from the last date of studies.
Furthermore, Canada already has various debt forgiveness options available. There is a Repayment Assistance Plan available, with income requirements, that will forgive all of the remaining debt gradually over a period of up to 15 years after leaving school, for most qualifying individuals. That period is reduced to 10 years for disabled individuals.
When I graduated from university, I had around $45,000 of student loan debt owing. At my first full-time job, I was just paying the minimums each month until I got into my second full-time permanent job about approximately half a year later. That job was offering unlimited overtime at the time.
I literally worked 7-days a week and saved up a lot of that money and paid it in lump sums towards my student loan debt. After about a year of doing that, I was done! It helped that I was living at home with my family and didn’t have any extra expenses of course. So I’m fortunate to have my family’s support. My dad even drove me to and from my office back then, which saved me time, effort, and money.
It was a draining experience and I kept it up for almost three years there, until I moved onto another job at the head office. I will talk more about those experience in future posts, so stay tuned!
After I paid off my student loans, my cubicle neighbour, a lovely middle-aged lady congratulated me and said that she was still paying hers off gradually. For context, she had other priorities and expenses that I didn’t have yet at that time. In my second year there, she paid off her student loans and told me that I inspired her to focus on tackling that. It was a really nice shared memory of ours. That lady retired several years later.
In conclusion, this topic and issue caught my attention and I feel that forgiving any amount of student loan debt will significantly improve the lives of many people around the world, who currently carry the same burden.
Wishfully, I hope that any future student loan cancellation programs can also refund or reimburse those of us who already paid it off years ago. That would be great, but doubtful I suppose.
What do you think? Let me know in the comments!
For more discussion topics about news, trends, lifestyle, personal experiences, and anecdotes, etc., check out my list of stories here. It will be updated regularly.
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