What's next for student loan borrowers who qualify for debt relief?
NORTH TEXAS (CBSDFW.COM) - The Department of Education estimates that 27 million people will qualify to receive student loan debt relief.
President Biden is forgiving $20,000 to Pell grant recipients and $10,000 to other borrowers, capped for borrowers who earn less than $125,000.
If you fall into this category, you might be wondering how you should go about this?
"It's our understanding that you can't apply for this yet," Financial Advisor Jon Lawton said. "There's a website coming. One thing I would say is just because you're getting a little bit of debt forgiveness and not having to make repayments today.. this isn't a reason to rack up more debt."
Economists with the SMU Cox School of Business have also spoken to this point.
"This debt forgiveness program might actually encourage future students to borrow more to fund their college cost knowing it's going to be relieved later which could raise the budgetary cost of the program even more," Dean Stansel, with the SMU Cox School of Business, said.
He points out taxpayers will be footing the bill.
"Using the tax dollars of those struggling with much lower salaries to relieve the debt burden of college grads doesn't really necessarily make a lot of sense," he said.
He also warns it could lead to other long-term repercussions. For one, encouraging universities to continue to increase tuition.