Cancellation of US student loans leaves borrowers hoping for vacations and medical school


FILE PHOTO – A graduate holds his mortar cap after an commencement ceremony at the University of Southern California (USC) in Los Angeles, California, U.S., May 12, 2017. REUTERS/Patrick T. Fallon

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WASHINGTON, Aug 25 (Reuters) – Highly indebted Americans welcomed U.S. President Joe Biden’s announcement on Wednesday that he would forgive $10,000 in student loans, and some are hoping they can forego working extra hours and maybe take a vacation or go back to school. .

“I wouldn’t hesitate to plan a trip or go on vacation,” said John Paul, 49, a Washington DC restaurant manager who said he took out loans for his son’s college tuition. “Before, it would be in the back of our minds that we have this debt hanging over us. Now we are a bit relieved.”

He was interviewed shortly after the Biden administration announced it would extend a COVID-19 pandemic-related pause on student loan repayments through the end of the year, while canceling 10,000 $ of student debt for borrowers with an income of less than $125,000 per year, or $250,000 for a married couple. Read more

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Paul said the relief will halve his outstanding debt.

Vincent Joseph, who graduated in 2019 and currently works at a lobbying firm in Washington, said he was happy to hear his remaining debt of $6,500 was eligible for relief.

“There could be a whole next generation that won’t have to work overtime or extra jobs to pay off this debt,” he said, noting that he had taken a job at the university to pay off. its loans.

“A lot of people are working extra jobs and therefore compromising on spending time with friends and family because they’re worried about their debt,” he said, calling it small step in the right direction.

Millennials, or those born between 1982 and 2000, “have significantly more student debt, lower levels of home ownership and lower net worth than previous generations,” according to a study released before the COVID-19 pandemic by the Government Non-partisan Accountability Office.

Alexis Horton, 20, a biology student at Howard University, said the announcement is a relief for those planning to further their education.

“As a biology student who wants to go to medical school, I’m racking up a lot of school loans, so to hear that I could possibly get $20,000 or $10,000 (off) sounds really good. “Horton told Reuters.

Proponents of student debt relief welcomed the measure, but also urged the Biden administration to do more to address systemic issues.

Kyra Taylor, an attorney at the National Consumer Law Center who focuses on student loans, described the step as “life-changing for millions of Americans.”

The White House estimates that its debt relief plan could lead to complete debt cancellation for about 20 million borrowers. About 43 million Americans have federal student loan debt, according to educationdata.org.

Taylor, however, added that the plan does not do enough to help borrowers with larger balances, like many Black Americans, who experts say face heavy debt burdens.

“The administration should take additional steps to address the racial inequities that the student loan system has exacerbated, which means black Americans, and especially black women, are burdened with more student loan debt just to access the same opportunities as everyone else,” she told Reuters. .

The government said it is also canceling up to $20,000 in debt for federal Pell grant recipients, some 6 million students from low-income families, and proposing a new rule that protects some income from retirement plans. repayment and cancels certain loan balances after 10 years. reimbursement.

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Reporting and writing by Kanishka Singh in Washington; additional reporting by Julio-Cesar Chavez and Matt McKnight; edited by Heather Timmons and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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