Local student, economist react to president’s student loan forgiveness plan

Wednesday the Biden administration also announced it is canceling up to ten thousand dollars of loans for borrowers who make under $125,000 a year.
Published: Aug. 24, 2022 at 4:51 PM EDT|Updated: Aug. 24, 2022 at 11:42 PM EDT
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(WFSB) – Eyewitness News spoke with local students about the president’s loan forgiveness plan.

There’s certainly mixed reaction.

Some think the income threshold is too high, but a lot of students Eyewitness News spoke with say they support the plan.

Connecticut’s student loan debt totals more than $17 billion, according to the education data initiative.

Wednesday the Biden administration also announced it is canceling up to ten thousand dollars of loans for borrowers who make under $125,000 a year.

If you are within that income range and also received a Pell Grant, you can seek forgiveness for up to $20,000 of your loans.

The White House says nearly 90% of the help will go to those making less than $75,000 a year.

The first part of the plan is to extend the repayment pause one last time to December 31.

Payments will resume in January.

Part 2 of the plan is to cancel some debt.

$20,000 will be cancelled if you qualified for Pell Grants during college. This was money given to students who were most in need.

If you did not receive those Pell Grants, you will get $10,000 cancelled.

Experts say to see how much you owe, or if you had a Pell Grant, call your school financial aid office.

“Everything has been consolidated into a website called studentaid.gov. Student aid is where they complete the FAFSA but also where they can see the whole student loan history,” said Katherine Presutti, Director of Student Financial Aid at the University of Hartford.

We answer some questions you may have on the president's loan forgiveness plan.

Part 3 of the plan is all about making it easier to pay off the rest of your loans.

“Gross income minus standard expenses is your discretionary income. They reserve right now 10% of that discretionary income can be used to pay student loans,” said Presutti.

If you use the income-based repayment plan, the new rule would require people to pay no more than 5% of their income.

For example, with the current payment plan a public school teacher making $44,000 a year is required to pay $197 dollars. With today’s new plan, they would pay $56 dollars, saving nearly $1,700 a year.

“It’s honestly really daunting. The only thing honestly making me feel a little bit hopeful are student loan forgiveness programs by the government and the fact that I’m going to be a lawyer so hopefully that’ll help,” said Stephanie Rovirosa, a UConn Law student.

After she completes her law degree, the aspiring human rights lawyer will have more than $250,000 in student loans.

“It weighs on you daily even though at the moment I’m not paying back any of my loans but still just the interest that’s accruing and knowing that I have that money taken out. That is very stressful,” Rovirosa said.

That’s why she supports student loan forgiveness programs from the federal government.

Others say they did community college, worked hard to pay student debt off, and are now saving for their kids.

“We have college accounts for them that we put in our money into already. You know, so are doing the right thing, and for what if you can just get free money from the government,” said Nicole Malley, Bristol Resident.

Patrick Gourley is an Economics Professor at the University of New Haven.

He says from an economist standpoint, he has some concerns about the loan forgiveness plan.

“There’s a good chance that this is a regressive program. Regressive meaning it helps people making more than the average income. The average American income is much lower than $125,000,” Gourley said.

The White House says it plans to release details on how borrowers can claim the forgiveness in the weeks ahead.

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