Student Debt to be Forgiven by US Government

On Nov. 30, 2016, the Government Accountability Office (GAO) released an official report stating that students who have abided by their loan-repayment policies, as according to the current government administration, will be forgiven. This means that the US government will be forgiving about $108 billion in loan debt. This number is an indication of an anomaly – one that is just as costly for the government as it is helpful for indebted students – and will continue for the next two decades, far beyond the longevity of current president Obama’s administration.

The number of loans taken has drastically increased, by almost three times its earlier number, in just the last three years. In addition, the country’s education department did not perform an adequate administering of increasing inflation over the years, which led to a massive miscalculation of actual required numbers.

According to the GAO report, the $108 billion is 33% of the total loan volume amassed over the years 1995-2017, which is $352 billion. Sadly, however, students who require such loan forgiveness programs the most – the unemployed, do not avail the benefits of the programs. Currently, it is estimated that 8 million students are defaulting their repayment of student loans, a number which these programs aim to curb; far rapidly than it has so far.

According to the scheme that depends on the income earned by the student, the loan repayment on a monthly basis will be 10% of discretionary income, which is the income that exists after taxes, mandatory payments and money for basic necessities is deducted.

In spite of the majorly positive connotation that this news may have for US undergraduate and graduate students alike, there are a few minuses that require to be accounted for. The first most obvious inference is that this number will have an effect on budget for education – i.e., it will decrease it. In addition, this number may add to the national debt overall, by releasing the financial burden on a relatively far smaller number of loan-takers.

It is predicted that the new administration may excise certain aspects of the program, and entirely remove the loan forgiveness provided to students who are indebted to for-profit colleges that defrauded them.