(NewsNation) — In the aftermath of President Joe Biden’s announcement that the Department of Education will forgive tens of thousands of dollars in federal student loan debt, many people are concerned about how this will impact Americans who have paid off their loans and the economy moving forward.
According to a NewsNation Decision Desk HQ poll, about 38% of respondents strongly support a proposal that would forgive federal student loan debt, but many are still disappointed because they wanted more money.
Mark Kantrowitz, a financial aid researcher, said there’s a proposal for an income-driven repayment play, which would cut monthly payments for undergraduate students.
“Income-driven repayment is a type of program that policymakers on both sides love to have,” he said.
Q: “In what ways is the government going to help the students who paid off their loans in the past, since they’re helping the students of today by getting rid of or eliminating their debt?” – NewsNation viewer Dennis of Buckhannon in West Virginia.
Kantrowitz: “Unfortunately, this only forgives the student loans of people who still owe student loans. People who paid off their loans during the pandemic may be able to get a refund of those payments, but they won’t be able to get a refund of payments made prior to the pandemic.
“Financial fairness and concerns often are personal. They relate to future borrowers, as well as to past borrowers, people who didn’t borrow to pay for their education, and people who didn’t borrow for their education because they didn’t go to college.”
Dennis: “How is the forgiveness of student debt going to help this country and its people?”
Kantrowitz: “It will increase spending somewhat, in aggregate we’re talking about roughly, I’d say around $30 billion more spending a year. So this has a small stimulative effect, it won’t really increase inflation by any noticeable amount.”
Kantrowitz also said people don’t need to be in any particular repayment plan to receive forgiveness; however, he said if you’re in a standard 10-year repayment plan, you may have two options.
“One is to re-amortize the loan so your payment gets lower. The other is to simply let the debt be paid off sooner. If you’re in an income-driven repayment plan, there will likely be no change in your monthly payment, but you will pay off your debt sooner,” he explained.