What Is Student Debt?

Student debt is the money owed on a loan taken out to pay for educational expenses. Individuals can borrow student debt through the government or private sources, such as banks and other lenders. Some lenders require payments while the student attends school, while others allow borrowers to begin repayment after they graduate.

School Expenses

澳洲幸运5官方开奖结果体彩网:Student debt is commonly used to cover the cost of education and other expenses. 澳洲幸运5官方开奖结果体彩网:Students may use loans to pay for a wide variety of costs, including:

• 澳洲幸运5官方开奖结果体彩网:Tuition amounts not covered through a student's assets, grants, parent loans, or 澳洲幸运5官方开奖结果体彩网:scholarships
• Housing
• Books and supplies
• Administrative fees
• 澳洲幸运5官方开奖结果体彩网:Advanced degrees
  

Repaying Debt

While it is possible for students to save money to put toward the cost of higher education, the price at many institutions narrows the plausibility of covering such costs without some form of financial assistance. Students might take out student loans with the help of a parent, and depending on the type of loan, the 澳洲幸运5官方开奖结果体彩网:parent may also be responsible for repayment.

While there is an expectation that students will pursue careers that offer them the means to repay student debt over time, there are no guarantees that they will immediately find this kind of employment after they graduate. Student debt differs from other types of debt in that it typically cannot be discharged in 澳洲幸运5官方开奖结果体彩网:bankruptcy except in cases of undue hardship.

According to 澳洲幸运5官方开奖结果体彩网:The 2𝔍022 Investopedia Financial Literacy Survey, 74% of millennials are seriouslyඣ stressed about their financial circumstances. Borrowing and managing debt was the second-largest concern of sur💦veyed millennials.

Student Loan Forgiveness

Graduates with federal student loan debt who qualify for special repayment plans, such as income-based 澳洲幸运5官方开奖结果体彩网:repayment, may also qualify for debt forgiveness if they meet the following criteria:

• Those employed by a government or not-for-profit organization may be able to receive 澳洲幸运5官方开奖结果体彩网:loan forgiveness under the Public Service Loan Forgiveness (PSLF) Program.
• Individuals who teach full-time for five complete and consecutive academic years in a low-income elementary school, secondary school, or educational service agency may be 澳洲幸运5官方开奖结果体彩网:eligible for forgiveness of up to $17,500 on your direct loan or FFEL Program loans.
• If a university or school closes while enrolled, students may be eligible for the discharge of their federal student loan.

Debt Relief Programs

In August 2022, the Biden administration attempted to cancel up to $20,000 in student loan debt for borrowers with Pell Grants and $10,000 for other borrowers at a cost of $430 billion. On June 30, 2023, the Supreme Court struck down this plan in a 6-3 decision. The justices in the majority found the forgiveness program overstepped the bounds of federal law and usurped the power of Congress to control government spending.

In response to the decision, the White House unveiled the 澳洲幸运5官方开奖结果体彩网:Saving on a Valuable Educat♊ion (SAVE) pla💛n, a new income-driven repayment (IDR) option for borrowers. The SAVE plan reduces monthly payments to 5% of discretionary income for undergraduate borrowers. It also changes the 澳洲幸运5官方开奖结果体彩网:discretionary income formula so that an estimated one million low-income borrowers will have their payments set at $0 per month. Furthermore, unpaid interest is no longer added to student loan balances, ensuring the amount you owe will not grow as long as payments are kept up to date. Another measure under SAVE provides loan forgiveness after 10 years for those with balances of $12,000 or less.

The Bottom Line

Student debt is common in an era of high-priced higher education. There are many funding sources for student debt, including state loans, private loans, and federal loans, but only federal loans qualify for income-based repayment plans or forgiveness. Incoming students will be at a greater advantage by lowering their debt through work-study, working outside of school, or 澳洲幸运5官方开奖结果体彩网:choosing an affordable school, as paying down debt can take decades and affect 澳洲幸运5官方开奖结果体彩网:how much of your monthly salary you have left for your long-term financial ༺goals.