‘Big changes could be coming for student loan borrowers’ was written by Anne Nova. Anne in this article explains that with a growing realization that there might be something broken in how the U.S.A finances education and the effects of coronavirus pandemic, there is a plan to reduce the burden to the borrowers. U.S.A finance department has already issued a statement directing all federal student loan borrowers not to make payment until October, and there will be no interest accumulated. In their $3 trillion heroes act, house Democrats are proposing the break be extended until September 2021. The July loan disbursement will be historic in that interest rate will drop from between 4 to 6 percent to 2.75 percent. Private student loan borrowers under the hero’s act will also have their loans covered until September 2021 and ten thousand of their debt forgiven. Republicans and democrat policymakers want student loan borrowers to be forgiven of their investment in case they are declared bankrupt (Nova).
Policies That Ease the Burden on the Student Loan
Astonishingly, a country like the U.S.A has taken this long to make policies that ease the burden on the student loan borrowers. The student loan servicing companies should be regulated mainly during this critical time when the world is fighting the coronavirus pandemic. Since the epidemic as caused closure of many businesses and hence many companies will have been hard hit financially, the college students graduating during the year will be entering the worst job market ever, in my opinion. The heroes act by the democrats is a good thing in that it will include not only the public student borrowers but also the private student borrowers. Individual student borrowers have not received any aid during this pandemic period, which is not good. The forgiveness of loans in case of bankruptcy is a critical thing that I agree with the policymakers (Arnold).
Private Student Borrowers’ Loans
Private student borrowers' loans are treated differently from the public student loans despite a New York Federal Reserve report showing that the student borrowers’ market has risen by 70% in the last ten years, overtaking the auto loans, mortgage, and credit cards (Swaminathan). The lenders should be lenient to students during this unprecedented time to ease the heavy burden, especially to those private students who are not from a wealthy family. The growing urge by policymakers who want that in case one is declared bankrupt, his/her debt can be erased. It is good because student loans are treated differently. For a student loan to be wiped, one has to show a state of hopelessness. It is baffling that a student loan cannot be quickly discharged, but credit cards are.
With the graduates entering the worst job market ever, it becomes more challenging to pay for the loans and take care of other bills than when the job market is good. Even when the job market is good, not everyone is lucky to get a job that pays well and can cater for the loan and other expenses. A story in the morning edition by Chris Arnold explains how Lauren managed to get her debt wiped. Lauren narrates after she finished school, she got a job that was not paying well, and it became difficult to pay both her loan and other bills to the point she became bankrupt. The lawyers she would approach for advice about ways he would use to reduce her credit charged higher fees because they said there were special rules for student loans, so it was difficult to convince the judges to discharge students’ loans (Arnold).
To conclude, I fully support the policies that the democrats and the republicans are willing to make policies that ease the burden on the student borrowers, especially the private borrowers who get no help from the lenders. The heroes act by the democrats is excellent. It covers even the private student borrowers’ loan until September 2021, where they can pay after the pandemic is over.
Arnold, Chris. “Myth Busted: Turns Out Bankruptcy Can Wipe Out Student Loan Debt After All.” 22 Jan. 2020, www.npr.org/2020/01/22/797330613/myth-busted-turns-out-bankruptcy-can-wipe-out-.
Nova, Annie. “Big Changes Could Be Coming for Student Loan Borrowers.” CNBC, 2020, www.cnbc.com/2020/05/22/heres-what-student-loan-borrowers-can-expect-in-the-coming-months.html.
Swaminathan, Aarthi. “'I Have A Chance Now to Have A Life': Navy Vet Who Won Watershed Student Loan Ruling Tells His Story.” Finance Yahoo, 2020, www.finance.yahoo.com/news/student-loans-discharged-in-bankruptcy-kevin-rosenberg-190151284.html.
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