SAN DIEGO — It’s estimated more than 43 million Americans carry some federal student debt, with more than half owing less than $20,000. All told, it’s about 1.6 trillion dollars of outstanding debt.
“I currently have almost $11,000 in private loans and then in federal loans, I have about $14,000 in student loans right now,” Christina Gomez, a first year PhD candidate at University of California, San Diego told FOX 5. Gomez, who is studying Latin American history, completed her undergrad studies at a state school to save money.
“This is definitely going to positively impact me along with a whole bunch of other people, which I’m really excited about, and I know there’s a lot of controversy with it about whether or not the government should be paying off the student loans,” Gomez added.
Under the plan announced Wednesday by President Joe Biden, anyone earning less than $125,000 annually is eligible and will be forgiven $10,000 in federal student debt — that includes most borrowers. And for those who got into college with a Pell Grant, they will see $20,000 of debt cancelled.
The plan also caps the amount paid back every month to no more than 5% and extends the pause on repayment, in place since March 2020, to the end of the year.
The president talked about the far-reaching consequences of the burden of debt, many choosing not to buy a home, start a businesses or have a family. This, Gomez says, is a grim reality.
“It can be a little bit scary and it can kind of hold you back in your career because even as you are making money, a big portion of what you’re earning is going to paying back that debt and sometimes that means having to go home and live with your parents,” Gomez said. “I think it’s really holding back this whole generation of people who don’t have somebody else to pay for their college and it’s setting them up behind their colleagues in a lot of cases.”
Eden Wiggins, who is pursuing a masters degree, says it doesn’t go far enough.
“The student debt load for people who have student loans far exceeds $10,000, so I think this is just the first step in the necessary change for student loan repayment,” Wiggins told FOX 5.
So what should borrowers do? About 8 million who are already in the system will automatically see their debt cancelled. For everyone else, the Biden administration will roll out applications online in the coming weeks and before the end of the debt repayment pause on Dec. 31.