ORLANDO, Fla. — On Wednesday, President Joe Biden revealed details of his student loan forgiveness plan, which will result in millions of people having their debt cut significantly.
For students who took out a loan and now earn less than $125,000 annually, $10,000 will be forgiven. Some will even qualify for $20,000 in relief. The president’s plan also puts a pause on loan repayments through the end of the year.
Residents across Central Florida said with rising rent, higher gas and grocery prices, the announcement couldn’t have come at a better time.
One financial expert said taking debt away from borrowers could give the economy a much-needed boost.
After years of worrying about when he would finally finish paying for school, Matthew Lago takes comfort in knowing his $20,000 in student loan debt will be completely cut in half.
“It’s absolutely incredible,” he said.
According to ABC News, a third of people with student loans already owe less than $10,000. That means they could see their debt totally wiped out under the president’s three-part plan.
Financial advisor Kimberly Stewart said paying back student loans can be a polarizing topic, but she believes the economic benefit will be enormous.
“Truthfully, I felt that little ping this morning because I paid mine off many years ago,” Stewart said. “If (borrowers) are able to get out from under this debt, they’re able to do more consumer spending. They’re able to buy more goods, more services, buy homes, things of that nature. That helps us all.”
Lago said he’s already thinking about adjustments he can make to his future financial plans.
“It’s just a great reality that I get to live with, so I’m just really happy about it,” he said.
Stewart said the situation should serve as a valuable lesson for future borrowers.
“For the generation coming, that will also show them in, ‘Hey, don’t make these same mistakes. Don’t burden yourself with that much student loan debt going to school,’” Stewart said. “One of the things I tell people when we’re talking about education planning now is: Look at schools that you can afford.”
Stewart said there are several ways to be savvy with your spending, even when it comes to something as expensive as education.
“If it’s going to strap you with debt that is going to take you years to pay off, you may want to reconsider that and go to an in-state school, go to a community college,” Stewart said. “There are many options for this generation going forward so they’re not burdened with this same issues 10,15, 20 years down the road.”
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