Society

US To Forgive More Than $108 Billion In Student Debt

| by Sarah Zimmerman

At least $108 billion in student loan debt is expected to be forgiven over the next 10 to 20 years, thanks to new federal programs that aim to make it easier for students to attend higher education institutions.

The Government Accountability Office released a new report Nov. 30, saying students in the U.S. are expected to have taken out roughly $352 billion in loans between 1995 and 2017 to attend college. Fortune notes that $108 billion, or one-third of that amount, will not be repaid before it is forgiven.

The new program will lower the borrower's expected monthly payments and forgive unpaid loans after 10 to 20 years, depending on where the borrower works. Newsy reports that the program makes it so students don't pay a fixed rate on student loans, but instead pay 10 percent of their after-tax income.

While some are praising the plan, saying that the program will help lower-income workers, the Government Accountability Office has criticized the program claiming the Department of Education has underestimated how much loan forgiveness would cost the federal government by billions of dollars.

President Barack Obama has called for a cap on how much debt the government should forgive, but Congress has yet to vote on his proposal.

President-elect Donald Trump wants to raise payments to 12.5 percent of a graduate's income after taxes and set the forgiveness date at 15 years, according to Newsy. 

Trump may also plan to dismantle other parts of Obama's debt-forgiveness program, particularly legislation that makes it easier for students defrauded by defunct for-profit colleges to have their debt completely forgiven.

Trump himself owned a for-profit school that some have called a "fraudulent scheme" that "preyed upon the elderly and uneducated to separate them from their money," according to The New York Times. The now-closed Trump University promised prospective students a high-class education in business and real estate, a promise that many students found to be a lie.

Reuters reports that Trump will likely dismantle Obama's efforts at debt relief for students of fraudulent universities, especially with a Republican Congress that opposed the current president's initiatives from the start.

Sources: Newsy via AOL, Fortune, Reuters, The New York Times / Photo credit: Mines CERSE/Flickr

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