HARLINGEN, Texas (KVEO) – The amount of student debt in the United States is nearly two trillion dollars. For the majority of 2020, people weren’t required to pay off their student loans held by the Department of Education.
People with student loan debt should thank the CARES (Coronavirus Aid, Relief, and Economic Security) law.
The CARES law ended monthly loan payments, known as forbearance, until September 30, 2020. This was then extended until December 31, 2020, and then January 31, 2021 as the pandemic continued. The CARES Act also ended the collection of overdue loans during this same period.
It was implemented to provide economic aid to Americans during the pandemic, especially those who were out of work. “This program is very good because it particularly targets low-income debtors,” said Teo Sepulveda, professor of economics at South Texas College.
Just over 15 million Americans owe $ 10,000 or less on their student loans.
So far, no concrete timeline has been set, but after Joe Biden’s inauguration on Wednesday, members of his transition team said Biden plans to extend that tolerance for some time.
On top of that, Democrats hope to write off at least $ 10,000 in student debt per person.
According to data from the Ministry of Education you can find here, erasing $ 10,000 in student debt would eliminate the total student debt owed by one-third of Americans.
While that might not completely eliminate debt for everyone, people who owe more than $ 10,000 would “see their principle decrease and therefore end up paying faster,” Sepulveda added. “Or their monthly payment would be smaller.”
Extending the forbearance period should help the economy recover, as having one bill reduced or all of their debt wiped out would allow people to spend more money in stores and restaurants.
The forgiveness of $ 10,000 of debt could have a significant impact on the Rio Grande Valley.
“A lot of people in the valley, their student debt is around $ 10,000,” Sepulveda said. “A little above, a little below, so most of that debt will be wiped out after it’s over.”
For those who haven’t completely written off their debt, there are income-based repayment programs that make it easier to manage your payments. You can find out if you qualify for any of these plans on the Department of Education website. here.
“They allow us to pay according to our income, so when our income goes down, we don’t have to pay the regular monthly payments. We just have to pay according to our income, ”Sepulveda said.