"A good start": Borrowers have mixed feelings about student loan forgiveness plan
BOSTON - President Joe Biden announced Wednesday that millions of Americans can have thousands of dollars in federal student loan debt forgiven.
Biden said his administration will forgive up to $10,000 in student loan debt for anyone who makes less than $125,000 a year. Those who went to college on Pell Grants are eligible to have $20,000 in loans forgiven.
Nora Yousif, a financial advisor with RBC, said borrowers will likely have to prove they are eligible to receive the debt relief from the federal government.
"It's going to be a logistical nightmare for the Department of Education," Yousif said.
The Department of Education said some borrowers will get the loan relief automatically, but others will have to request the relief using an application which will be launched in a few weeks.
Youssif said more than 40 million Americans have student debt and Wednesday's announcement would leave more than 15 million people completely debt free.
"That's huge," said Yousif. "We are talking about $300 billion of debt just disappearing."
It is welcome news for 33-year-old Michael Carraggi. The father of two and his wife accumulated more than $150,000 in student loan debt. As of today, they have paid about a third of it off.
"It's tough to catch up to a mountain like that with a modest to good paying job," said Carraggi. "Even if you have a great paying job, it's really hard."
Carraggi said he hoped Wednesday's news would bring attention to what he called the bigger problem: young adults making major decisions that often impact their financial health for decades.
"Having a teenager who can't drink alcohol, or can't buy alcohol at least, be able to say 'yes,' I will take out this tens of thousands of dollars of debt at double digit interest rate. That is predatory," Carraggi said.
Students at Boston University had mixed reviews Wednesday.
Raeann Idle is about to start her first semester of graduate school there and has about $18,000 in current student loan debt.
"I don't think it's enough, but it is a good start," said Idle. The criminal justice major said the stress of figuring out how to pay for school is as high as the stress to make good grades.
"I would say it's a big part," said Idle. "Half of it for me is academics and the other half is financial just because I know if I can't come up with the money either through a loan or out of pocket, I am not going to school that semester."
BU senior Mack Luby said he is torn over President Joe Biden's student debt announcement.
"I am a little conflicted on it just because I consider myself more fiscally conservative," said Luby. "I find myself not exactly favoring the idea of forgiving $10,000 in federal student loans. On the other hand, I benefit from it."
Yousif said there are concerns this student loan forgiveness could fuel inflation and bring the potential for high student tuition rates.
