Student Loan Forgiveness: Where are we, and where do we go from here?

The acquisition and disposition of student debt have been polemical subjects going back decades, and the debates show no signs of waning any time soon. Indeed, the White House's ambitious student loan forgiveness program was blocked by two federal courts and is pending oral arguments in the Supreme Court toward the end of February. For those with student loans, the uncertainty may pose a lot of stress and frustration.

The fate of loan forgiveness remains up in the air, but here are some down to earth facts on where student debt in America stands right now and how you might consider dealing with that uncertainty if you or someone you love has outstanding loans.

• Degrees from American colleges and universities remain an important aspiration for tens of millions of students, both American and foreign nationals. There are over 4,000 colleges and universities in the United States and nearly 20 million student enrolled.
• The Association of Public & Land-Grant Universities estimates that "median earnings for bachelor's degree holders are $36,000 or 84 percent higher than those whose highest degree is a high school diploma."
• The average cost of tuition for the 2022-2023 school year is nearly $40,000 for private colleges, $23,000 for out-of-state students attending public schools, and almost $10,500 for public in-state students. Those costs have risen exponentially since the Higher Education Act of 1965, which expanded access through federal income-based grants. Tuition costs have gone up by an average of more than 6% a year over the last 20 years, outpacing regular inflation by over 170%.
• Currently, about 44 million people owe $1.76 trillion in student loan debt.
• "About 30% of undergrads graduate with no debt and about 25% with less than $20,000. Despite horror stories about college grads with six-figure debt loads, only 6% of borrowers owe more than $100,000 — and they owe about one-third of all the student debt. The government limits federal borrowing by undergrads to $31,000 (for dependent students) and $57,500 for those no longer dependent on their parents — typically those over age 24.) Those who owe more than that almost always have borrowed for graduate school."

The best course of action will always depend on individual circumstances, but if you do currently have student loans, consider:

• Only public, or federal, student loans are eligible for deferment under the current rules.
• If you have private student loans:


- Think of consolidating if it will save you interest over your current rates.


- If you're able, set a plan to pay more than the minimum to expedite paying off your loans and saving yourself interest expense over the long run.



• If you've already submitted an application for federal student loan forgiveness, your application will be held until the courts make a ruling. There's no need to submit a new application at that point.
• Because federal loans are still in deferment, accruing no interest and no payments, it likely won't make sense to pay on those loans until there's a clearer direction forward. Those loans will remain in deferment until the end of July unless new guidance is provided before then.
• In the interim, federal loan holders can take agency by continuing to save and build a cash reserve that pays interest (such as a high yield online savings or money market account) and continuing to work toward their other future goals.

Let us know how we can help you plan through the noise and help you build a secure financial footing for now and many years to come.

If you would like to receive more information on making smart money moves for your future, be sure to contact us today!