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, a 3% increase from the second quarter of 2020.
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, a leap of 91% 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 but has now soared to $30,000. These facts put student loan borrowers in a precarious situation when it comes time to repay their loans.
One solution that’s been proposed suggests the federal government offer some form of relief or forgiveness program to help students regain their footing, post-pandemic. However, not everyone was on board, including some American taxpayers who will ultimately foot the bill. 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 Biden’s student loan pause fix the problem?
It’s unlikely that President Biden will be doing any unilateral canceling of federal student loans as he has stated that Congress needs to be involved in the process. Biden has also resisted pressure from Progressives in his party to unconditionally forgive all federal student loans. Although it’s still unclear as to whether unilateral executive action on large-scale student loan forgiveness would be legal–as student loan forgiveness advocate groups claim–Biden has opted to take the “targeted” approach for now.
Biden’s targeted student loan forgiveness involves many aspects and is specific to certain government programs. However, in most cases, the loan is not canceled, but a portion of the loan is forgiven for particular services or a hardship situation.
The following are a few examples of partial student loan forgiveness programs that are available.
- Public Service Loan Forgiveness: Those employed by public or non-profit organizations may file to have their loan forgiven after ten years of service.
- Borrower Defense to Repayment: Established to help students 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: Allows borrowers with permanent disabilities to completely discharge their student loans. An estimated 500,000+ borrowers are currently eligible.
Debt API: Empowering borrowers
Spinwheel’s modern debt API is helping Americans build healthier relationships with their finances by providing the tools and know-how needed to manage student loans and other types of debt. Focused on remaining the go-to tool financial products need for successful financial health management, our debt API delivers a user-friendly, stress-free approach to loan repayment.
Businesses transform their products and services
Our debt API allows businesses to see a single source of truth for all debt accounts and allows for easy, immediate access to fresh loan data. Full visibility into the data helps borrowers understand their debt and drives smarter, more informed decisions. What’s more, the ability to schedule optimized payments keeps loan payments on track and brings real peace of mind.
Developers can build and launch fast
Spinwheel’s no-code and low-code drop-in modules make it so developers of any skill level can quickly implement and flip the switch to launch quickly. Developers can easily choose what features they are interested in and test them out in our free sandbox environment. All of our drop-in modules are white-labeled with a simple interface that any developer or designer can customize and adjust for any branding. Go live within hours with our developer-friendly API docs.
A better perspective
The best thing you can do for your borrowers is to empower them to improve their relationship with debt. Spinwheel’s debt API helps borrowers navigate student loans in a streamlined, efficient way as it transforms the way they manage – and feel about – their debt.
Spinwheel is the leader in unlocking consumer value with debt, and with easy-to-use drop-in API modules, your developers can customize and implement quickly. Spinwheel is dedicated to helping borrowers tackle student loans, get a handle on student loan repayments, and help students get out of debt sooner.
For more information, visit Spinwheel here. You can reach out to our sales team here.