Consumer Alert: The president could wipe out $10,000 of your student loan debt. Here’s how it would affect New Yorkers
ROCHESTER, N.Y. – Wednesday could be the day that you learn as much as a third of your student loan debt is going away. The president is expected to make an announcement about whether he’s going to forgive $10,000 of federal student loan debt per person.
Student loan debt is the albatross around the necks of so many college graduates. For two years, a moratorium has been in place, and debtors have not had to make payments on those loans. But the moratorium is set to expire on August 31, so the president is expected to either extend the moratorium or permanently cancel $10,000 per person in student loan debt.
According to the Institute for College Access and Success, 54 percent of New York college graduates are in deep debt.
The average amount is $30,951, making New York 16th in the nation for graduates holding the most student loan debt. And here are some troubling statistics from the non-profit Scholarship America. College graduates with student loan debt are 36 percent less likely to buy a house, less likely to take out a car loan, and are more likely to go back home to live with Mom and Dad after graduation.
So here’s how the president’s action could impact your wallet. If you had the average debt load of New Yorkers, $30,951, the average interest rate of 4.12 percent, and the standard loan term of 10 years, the monthly payment on that debt is $315. But if the president wipes away $10,000 of debt, your amount owed would now be $20,951. And it would reduce your monthly payments by just over a hundred bucks to $213.
So for so many, that’s huge. But is it a good thing for the country? There are critics on the left and the right who say this could actually make inflation worse and only benefits higher income college graduates. While the president points out that only folks making $125,000 less could get loan forgiveness, that doesn’t quiet critics. They point out folks who didn’t go to college get no benefit, but may still pay the price in terms of higher inflation.