Americans who are under the financial strain of repaying student loan debt may now be off the hook for their education costs. President Obama signed a new federal bill this week releasing any student who has accrued outstanding debt because of the high interest rates and outrageous balances caused by college loans.
“Any student, past or present, who has taken loans from the federal government within the last 10 years to pay for higher education, will no longer be required to pay back those loans.” Said President Obama. “This forgiveness also is to be extended to any student currently enrolled in college, who may need financial assistance for the next several years as they finish their degrees.”
The idea of student loan forgiveness has been in the news for several years now, as students are forced year-after-year to leave school due to crippling costs of a higher education in the US. With most students not able to afford any facet of college without loans, the government has given out nearly $1 trillion dollars to those seeking a form of higher education. Although certain costs of school are generally offset by private loans, grants, and scholarships, almost every student currently in a 2 or 4-year program has some existing loans with the US government.
“Education is the single most important thing in my mind when it comes to furthering this great nation.” Said Obama. “I can think of no better way to help the young people, this next generation of thinkers and doers, than by helping them to stand on their feet more firmly, and to give them some hope that they can and will receive their degrees, and they can work towards a future for themselves and their families, and not just a future of paying back debt.”
Although the bill was signed on Thursday afternoon in a live press conference, the forgiveness of loans will not begin until the end of 2016 at which point current and former students will begin to see interest and repayment amounts dwindle automatically, eventually leaving everyone with a complete zero-dollar balance.
Even while the government has decided to forgive loans from the public sector, private held companies such as Sallie Mae, the leading lender for higher education, still has sky-high interest rates and non-budging repayment schedules. With close to $1 billion in net income every year, Sallie Mae has stated that they are not interested in following suit with the governments plan for loan forgiveness.
“We are a private company, and private lenders. We have no interest in not pursuing every possible avenue to squeeze every penny we can out of our borrowers.” Said Carla Edwarton, CEO of Sallie Mae. “Education is important to us, but paying back your loans are what we care about. We aren’t loan sharks, we aren’t going to break your kneecaps if you don’t pay, as much as we would like to…[But] you can bet we love making all that sweet, sweet high-interest rate cash.”
Students who are currently making payments or have defaulted on their loans can expect to receive a packet letter within the next 3 to 4 months detailing how their assistance loans will be forgiven and what percentage, if any, will be left owed to private companies and firms.