INDIANAPOLIS — The White House is expected to layout new plans to cancel a large portion of student loan debt.
The current pause on student loan payments is set to expire at the end of this month. Now, with just one week to go, experts said that pause could be extended and borrowers could get thousands of dollars in loan forgiveness.
An official announcement is expected on Wednesday, but financial experts we spoke to said the announcement will likely include $10,000 in loan forgiveness for those who make less than $125,000 a year.
“I would love it if they got rid of $10,000 of my student loan debt,” said Abbi Smith, an incoming junior at Bulter University majoring in pharmacy. “I’m going to be here for six years so I’m going to rack up a lot.”
“It’s going to cut off about $100 a month if you’re on that standard 10 year repayment plan,” said Phil Schuman, the Executive Director of Financial Wellness & Education at Indiana University. “It is, in a way, basically saying ‘here – have $10,000!’ Which is fantastic! I don’t think anybody would turn that down.”
Schuman said the announcement would mark the largest forgiveness of federal student loans to date.
“We’ve never seen this on an individual level so this is pretty remarkable,” said Schuman.
Schuman said Wednesday’s announcement could also include yet another extension of the student loan moratorium – which has frozen student loan payments and incurring interest rates since March of 2020.
“I know that student loans are a huge reason why a lot of people can’t have access to higher education,” said Isabela Ali, an incoming senior at Butler University studying finance. “It sounds like an opportunity for more people to get an education and relieve a lot of stress and anxiety on families.”
“I think it could take a lot of stress off of students and give them more time to focus on their academics,” echoed Emma Stoody, another finance major entering her junior year at Butler University. “I don’t think you can just keep giving money away, but I think $10,000 is a fair amount. College is expensive.”
Schuman said it is unclear whether consolidated loans or Parent PLUS loans would be included in the President’s loan forgiveness plans.
“I think we’re still trying to find out as much information as everybody else is at this point,” said Schuman. “Always budget for worst case scenario. And worst case scenario here would be that payments would resume September 1st.”
With the extra money Americans will save, Schuman recommends starting an emergency fund, building up your savings account, or putting the money towards further lowering your debt.
“What we don’t want to see is a lot of people scrambling come September 1st trying to figure out exactly what they’re supposed to do and how they’re supposed to do it,” Schuman said.