US Student Loan Crisis: Proposed Bill Aims to Erase Interest Rates

Payments for student loans are expected to resume, though Democrats are trying to ease the burden by getting rid of the large interest that will also kick in once student loan payments resume. Rep. Joe Courtney, a Connecticut Democrat, and Sen. Peter Welch, a Vermont Democrat, are working on a new bill that is aiming to get rid of that interest for current borrowers.

The Supreme Court struck down President Joe Biden's sweeping debt forgiveness plan. This means that those with student debt must soon resume payments, which could affect many people financially. This is made worse because the interest that borrowers got because of the pandemic break might become higher.

The two Democrats shared this new bill with USA Today and it showed that it would also cap interests on a sliding scale for future borrowers. It also is trying to devise a way so that taxpayers would not be the ones to shoulder the costs.

Student loan debt payments are due to begin again in October after being put on hold during the pandemic, and this has many borrowers worried about their finances. In addition, the interest cut to 0% for over 3 years and that interest will resume on September 1, and that looming expense is just as bad for many borrowers,

Joe Biden Has a Backup Plan To Deal With the Student Loan Crisis

Despite the SCOTUS striking down his original plan, the Biden administration has not yet given up on alleviating student loan debt. It is currently trying a different legal path to try and establish a new program, and it is relying on the Higher Education Act to do so.

"Our goal is to provide debt relief to borrowers, particularly those working- and middle-class borrowers who need it most," said Undersecretary of Education James Kvaal in a statement. According to Forbes, the Department of Education is now working to "hold a public hearing to establish a committee of stakeholders that will work together to develop the parameters of the new program" to make this happen.

For the time being though, Biden promised that there will be a 12-month "on-ramp" period after student loan payments resume. This means that the government will not penalize borrowers should they miss a payment. The administration is also trying to put up a new loan forgiveness program by the time the on-ramp period ends in 2024.

There Are Still Many Paths To Dealing With Student Loan Debt

CNBC listed three ways to deal with the student loan crisis that many people do not know about. The first one involves Income-driven repayment plans, which borrowers can get after 20 to 25 years of payments. The second one is actually from George W. Bush, and it is the Public Service Loan Forgiveness where certain nonprofit and government employees have their student loans canceled after 10 years or 120 payments.

There are also forgiveness options for teachers, nurses, and others, with such programs as the Teacher Loan Forgiveness Program where teachers who work for five consecutive years in a low-income school may be eligible for up to $17,500 in loan forgiveness. In the Nurse Corps Loan Repayment Program, certain nurses get up to 85% of their student debt canceled.

This article is owned by Latin Post.

Written by: Rick Martin

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