The student loan debt crisis has reached its peak in the United States. The Federal Reserve estimates that borrowers owed a whopping 1.7 trillion in the second quarter of 2021. This is a 3% increase from the second quarter of 2020. We’re taking a closer look at Bidens student loan pause and what it implies for students and financial institutions alike. Read on to know more.
Three percent may seem small, but that’s a big chunk of change when you’re dealing in the trillions. Rewind to the second quarter of 2011, Americans owed $905 billion in student loan debt. That is a whopping 91% increase in merely a decade. The aggregate numbers are alarming, and how this affects the individual borrower is just as disturbing. Typically, the average personal student debt was around $17,000 in 2005. It has now oared to $30,000. These facts put student loan borrowers in a precarious situation when it comes time to repay their loans.
One of the solutions is some form of relief or forgiveness from the federal government. However, not everyone is on board with that, especially the American taxpayer, who will ultimately pay the price. To dispel the confusion about reality vs. fantasy regarding student loan forgiveness, read on to discover what is available to students in the form of federal relief.
Will Bidens Student Loan Pause Plan Work?
It’s unlikely that President Biden will unilaterally cancel federal student loans. He stated that Congress’ involvement in the process is essential. Biden has also resisted pressure from progressives in his party to forgive all federal student loans without condition. Although it’s not clear whether student loan forgiveness would be legal on a large scale, groups that advocate for it claim legality. However, Bidens student loan approach seems to be a “targeted” one for now.
Bidens student loan pause involves many aspects and is specific to certain government programs. However, in most cases, the loan is not canceled. Instead, partial forgiveness of the loan in place of particular services rendered. The following are a few examples of partial student loan forgiveness programs that are available.
- Public Service Loan Forgiveness: It is possible for those employed by public or non-profit organizations to have their loan forgiven after ten years of service
- Borrower Defense to Repayment: Established to help borrowers defrauded by their schools, the Biden administration’s Education Department has now expanded this debt relief program to include thousands of additional student loan borrowers.
- Total and Permanent Disability Discharge: This allows borrowers with permanent disabilities to completely discharge their student loans. 500,000 borrowers are estimated to be currently eligible.
Spinwheel and embedded debt APIs – The future of financial wellness
Spinwheel’s focused efforts help Americans have a healthier relationship with debt. Spinwheel has developed cutting-edge embedded debt APIs that focus on ease-of-access – making your already familiar financial wellness and debt repayment apps more innovative and efficient than ever. Some use-case aspects include letting customers use their financial data to optimize their loan payments better or helping employees manage debt efficiently. It could even be simply offering an embedded debt repayment calculator that helps customers gain quick insights.
Spinwheel is the leader in unlocking consumer value with embedded debt APIs. Thanks to Spinwheel’s easy-to-use drop-in fully embeddable API modules, your developers can customize and implement quickly. Spinwheel has a strong focus on helping tackle student loans and student loan repayments to help students get out of debt sooner. For more information, visit Spinwheel here.