Presidential candidates focus on federal student loan refinancing as an aid to the growing financial concerns of Americans in the last decade.
With the student loan crisis reached $1.5 trillion in the first quarter of this year, politicians are looking to rewrite the rules on the loan interest, repayment, as well as refinancing. Some of the plans include completely erasing people’s balances and reducing monthly repayments.
The decision came alongside the Politico Consult Poll, which revealed that more than half of Americans say student debt is a major problem for the country. This debt overturned credit card and auto loans, which are two of the largest financing products in the United States.
The average college graduate carries a student loan debt of $30,000 today. This is a huge increase from the average student loan debt of $10,000 for graduates in the 1990s. Meanwhile, about 3,000 borrowers go into default daily.
Candidates like Sen. Bernie Sanders wants to wipe out the outstanding student loan tabs and let borrowers be freed from their debt. Sen. Elizabeth Warren proposes to forgive the debt of students with household incomes of $100,000 and below. Meanwhile, Sen. Kamala Harris hinted that she is planning something soon to address the growing concern over student loan debt.
Education Secretary Betsy DeVos appointed a senior government official to facilitate the Federal Student Aid program. However, the official resigned last month, saying that the country’s student loan system is ‘fundamentally broken’ and calls for billions of dollars in debt to be forgiven.
DeVos, upon hearing presidential candidates’ plans to erase student loan debt, called the idea ‘crazy.’ He said in an interview with Fox, “Who do they think is actually going to pay for these?”
Every four to five years, student financing aid gets updated. However, it’s been a decade since the Higher Education tweaked the program. Many anticipate that the update will come in 2020.