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Can federal student loans be forgiven after 10 or 25 years?

New plans from the Biden camp have opened the door slightly towards further debt forgiveness, but critics say they don’t go far enough.

Update:
One year into the Biden presidency and there has been no word on student cancellation. Biden has extended the student debt moratorium to help assist borrowers.
SAUL LOEBAFP

An announcement on Tuesday saw the first moves by President Joe Biden to tackle the crippling student debt in the US. These plans included a revision of income-riven payments to make it easier for students to qualify for measure in which their loans could be automatically cancelled after 20 or 25 years.

The Education Department is to conduct a one-time revision of income-riven payment counts for all Direct Loans and federally managed Federal Family Education Loan Program loans.

Any months where debtors have made payments will count towards income-driven repayment, regardless of payment plan, and consolidation status. This type of repayment plan sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size

And importantly, in these schemes any borrower who hits the 20- or 25-year mark, depending on the plan in question, for monthly payments after this revision will have their loans cancelled automatically, the department stated.

“Student loans were never meant to be a life sentence, but it’s certainly felt that way for borrowers locked out of debt relief they’re eligible for,” said US Secretary of Education Miguel Cardona said in a press release.

So far, the Biden administration has cancelled $17 billion of student debt so far. This may seem like a large amount, but when the total of all student debt is $1.61 trillion. In some sort of context, that is this many zeroes: $1,610,000,000,000. $17 billion is the equivalent of little over 1 percent of all student debt.

Is there a precedent for this style of loan forgiveness?

These ideas are in line with how student debt is paid in the United Kingdom. Across the pond, students pay back 9 percent of their earnings over a threshold of £27,295 a year. For example, someone earning £30,000 would pay 9 percent annually of £2,705, or £243.45. This is paid monthy meaning payments of just over £20 a month.

Unlike the US, this is the default position for all UK students and does not need to be requested.

Furthermore, whatever debt is remaining is written off by the bank 30 years after graduation, regardless of how much remains as the debt is subject to interest. While there is concern that this will mean the government footing the bill for students despite university privatisation, it means students themselves have no fear of becoming destitute or homeless.

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