On the cusp of the 2020 presidential election, lawmakers have introduced several proposals for how to handle the student loan debt crisis in the United States. Currently, 44 million individuals across the U.S. have student loan debt, with an average balance of $30,000. Likewise, more than half of Americans agree that student debt is a major issue in this country.
This election season, both Democrats and Republicans are coming to the table with proposals on how to handle the current student loan debt crisis, and how to help the nation avoid a repeat occurrence of this crisis in the future. So far, the proposals range from complete student loan forgiveness to revised payment options.
If you’re currently suffering under the burden of crushing student loan debt, here are some of the changes that might be coming in the near future.
What’s Being Proposed to Handle Student Loans and Bankruptcy?
One of the most common ways people free themselves of the burden of debt is through bankruptcy. Student loan debt, however, can’t be included in Chapter 7 or Chapter 13 bankruptcy unless an individual can prove they’re in a hopeless situation. It’s been proposed that in the future, student loan debt could be included in bankruptcy situations to help those facing multiple debts, including credit card debt, mortgage debt, and more.
What Are Plans for Simplified Student Loan Repayments?
Currently, there are 14 different repayment plan options for federal student loan debt. Critics of student debt believe that having so many plans make it difficult for borrowers to understand their choices thoroughly and make educated decisions. One of the proposals is to reduce the number of repayment options from 14 to two.
- Option 1: Standard 10-year repayment option with a fixed interest rate
- Option 2: Income-based repayment option with a repayment term of 20+ years
With these two options, those who face student loan debt could easily choose the one that works best for their financial situation. If neither of these options is satisfactory, they would need to determine the best course of action with a student debt lawyer.
How Can We Get Better Interest Rates for Student Loans?
A person with a student loan debt of $30,000 and an interest rate of 4% will pay up to $7,000 in interest over the life of their loan. However, the average interest rate usually falls somewhere between 5.5-6.8%, meaning they could end up paying $10,000+ in interest depending on their loan terms.
Many political leaders and average Americans consider the interest rates on student loans appallingly high. That’s why many candidates and interested parties are proposing a lower, more affordable interest rate for future student loans. The hope behind a lower interest rate is that students will continue to take on student loans but with a more manageable payment amount.
Does the Future Hold Total Student Loan Debt Forgiveness?
Perhaps the most sweeping possibility for individuals with student loan debt is that, in the future, student loan debt will be forgiven altogether. Several Democratic presidential nominees, including Vermont Sen. Bernie Sanders and Massachusetts Sen. Elizabeth Warren, have plans to eliminate outstanding student loan debt. Their argument is that eliminating this debt would boost the economy because borrowers would have more money to spend and more money to invest without the burden of their student loan payments.
Some politicians, however, believe that graduated student loan forgiveness rather than total student loan forgiveness is the way to go. Certain plans outline loan forgiveness based on an individual/household’s income. Another plan, proposed by A. Wayne Johnson, U.S. Department of Education’s chief operating officer for Federal Student Aid, would allow every household to get $50,000 worth of student loan forgiveness totaling more than $925 billion. Passing any of these proposals would be a major step forward for anyone currently living under the pressure of student loan payments.
Settle Your Student Loan Debt With McCarthy Law
If you’re crumbling under the burden of student loan debt and don’t want to wait to fix your finances, it’s time to talk to the attorneys at McCarthy Law PLC. Our attorneys care about your financial situation and will do everything in their power to help you alleviate the financial pressure you face. We offer options and guidance regarding debt consolidation, debt settlement, and refinancing.
To schedule your free consultation, call 855-976-5777, or contact us online today. Don’t wait any longer. Start forging your own debt-free path right now!