What Biden's Scholar Mortgage Compensation Plan would imply for debtors

During the 2020 presidential campaign, Joe Biden pledged to cancel a large portion of the country's outstanding student loan debt.

Leah Millis | Reuters

Even before the pandemic cost Adam Anderson his job, paying back his student loans was a challenge. He owes more than $ 60,000.

As a physical therapy assistant in Clearwater, Florida, he made around $ 50,000 a year, but after his rent, different bills and student loans were paid back every month, and little or no money was left. "By the day you get paid, you're counting down the days to your next paycheck," said 31-year-old Anderson. When he was fired in May, his account balance was less than $ 2,000.

He's only been able to get one part-time job lately and his hours are inconsistent.

"If you only work six to 15 hours, you don't bring much home," he said.

Fortunately, the Department of Education gave borrowers on student loans a break from their bills through the end of the year, but Anderson doesn't know how he'll start making payments again from January.

Adam Anderson will likely wipe out a large portion of his student debt if Biden's plan becomes a reality.

Source: Adam Anderson

He's not even sure how to get rent.

"We have to have a tough discussion with our landlord," he said, when he is no longer able to work in the next few weeks.

But after months of financial strain, Anderson, along with millions of other student loan borrowers, got at least some hope when Joe Biden won the presidential election. During the campaign, Biden had said he would cancel $ 10,000 of the debt for all borrowers, and the rest for those who attended public colleges or historically black colleges and universities and made less than $ 125,000 a year.

The student loan crisis was particularly painful for black borrowers: nearly 85% of black college graduates carry educational debt, compared to 69% of white college graduates. And because of racial wealth and income differentials in the US, black borrowers suffer higher default rates and are also in debt for much longer than their white counterparts.

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Biden's plan for granting student loans is much tighter than the relief proposed by his opponents on the left in the democratic elementary school, but according to calculations by university expert Mark Kantrowitz it would still reset around 10 million borrowers' balances to zero. Overall, the policy would cut the $ 1.7 trillion student loan outstanding by about a third.

Biden's proposal is a response to the growing hunger for change.

Education debt weighs more on Americans than credit card or car debt, and while the country was in the midst of its longest economic expansion in history, with unemployment at a half-century low, more than one in four student borrowers was either default or standard.

According to a poll by Politico / Morning Consult, more than half of Americans say student debt is "a big problem" for the country. And a poll found that 58% of registered voters support student loan making. More than 730,000 people have signed a Change.org petition entitled "Joe Biden: Delete Student Loans!" Signed.

"For the first time in years I will be at peace," said Anderson, who will likely reduce a large portion of his debt if Biden's proposal becomes a reality. He attended the University of Indianapolis.

This debt relief would open doors for him that his monthly student loan payments are currently closed.

"I think my wife and I could start saving," said Anderson. You might also consider starting a family, he said, adding that having a child is incredibly important to him.

When he was growing up, his father was hardly in his life. "He came by when it suits him," said Anderson. He wants to do better. "I could be there for someone," he said.

"But I can't think of a situation where I can have a child and care for them while getting down on student loans," he said. "I feel like I can be 50 before I can start my life. It's heartbreaking."

Student loans determine people's lives in countless ways. Research has found that up to 40% of those with high credit say the debt caused them to postpone parenting. The loans also make it difficult for people to buy houses, start businesses, and salt away money for their old age.

Biden's chance of passing laws that would lower or eliminate people's student loan balances depends largely on the composition of the Senate, which is still in balance. "In general, Democrats are in favor of student loan making, while Republicans are against it," said Kantrowitz.

Biden may have another option to provide relief for borrowers.

There is an argument that is gaining traction that the president can bypass Congress to cancel the student loan debt. (Had she become president, Sen. Elizabeth Warren, D-Mass., Would have promised to do so). President-elect Biden has not yet signaled whether or not he would consider this avenue, which is likely to be brought to justice.

Keenan Greigo would also see much of his debt canceled if Biden's plan were carried out. He's scared of the $ 1,200 monthly student loan payments he'll have to make in January.

Source: Keenan Greigo

Keenan Griego, a Vancouver, Washington nurse who has worked with hundreds of Covid-19 patients in the past few months, owes more than $ 145,000 in student debt, much of which he would cancel if Biden's promise became politics .

He's afraid of the $ 1,200 monthly student loan payment he'll have to make in January. After the election, however, he is a little more optimistic.

"My hopes are much higher when the Biden government comes in," said Griego.

"You go to school all these years to help, but then you have an insurmountable amount of debt," he said. Like so many borrowers, he said he had to defer home ownership and start a family with his wife, Alexandria, an occupational therapist who owed $ 50,000 in student loans.

He currently works about 40 hours a week but said he will need to get a part-time job soon if he is to cover his monthly student loan bill and keep saving.

That means less time for what he loves like taking photos of the great outdoors, hiking, and spending time with his family.

"You can't do that if you have to work 60 hours a week to make a student loan payment," Griego said.

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