Debt

One of America’s biggest problems is debt. Americans are addicted to debt and the money owed to the federal government has been increasing for years. National debt is roughly around $31.3 trillion today. A part of the balance comes from student loans for college. The amount of college debt is $1.745 trillion, held by 43 million Americans. Students on average owe $37,787 in federal loans. Why is the debt in the United States only getting worse?

As the Federal Reserve battles inflation by increasing the interest rates, it is getting harder and harder for Americans to pay off debt. Inflation at the end of October is at 7.7%, which is down 0.6% from September’s 8.4%. People applying for student loans, auto loans, and mortgages now have to pay more interest. 

Fewer and fewer people every year are enrolling in college. Since 2020, there has been a decline of undergraduate students; enrollment was down one million. In hope to increase the enrollment in college and try to ease the minds of Americans, the government is implementing a new relief program.

The Government Plan

The Biden administration has two different options for Americans to remove debt from their student loans. For students without the Pell-Grant, they can receive up to $10,000 off their loan, and up to $20,000 with the Pell Grant. There are two goals with the implementation of the debt removal. The first is to address the amount of bills associated with growing college costs, and the second is to make student loans easier to manage. The Department of Education is stretching the student loan freeze until the end of December of 2022 with the 0% interest. A part of the plan to help palliate the minds of students with debt; they plan on cutting the discretionary income needed to pay the loans each month from 10% to 5%. The program aims to benefit the vast majority of people in the United States with student loans. The Pell Grant has also been increased by President Biden to provide more financial aid to students. The student loan relief program hopes to create a smooth transition back into the repayment of student loans after the pandemic. 

Currently, the student loan relief program is being closed by the courts. The administration is actively trying to reopen the program and change the decision of the courts.

More Resources 

 https://studentaid.gov/debt-relief-announcement

https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24/fact-sheet-president-biden-announces-student-loan-relief-for-borrowers-who-need-it-most/

https://educationdata.org/student-loan-debt-statistics#:~:text=The%20 outstanding%20 federal%20loan%20 balance,be%20as%20high%20as%20%2440%2C780.