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- I’m happy for those who have some or all of their student-loan loans forgiven by Biden’s plan.
- But with 11- and 13-year-olds, I’m more determined than ever to save for their education.
- There’s no respite in sight for the high cost of college, and high-earning kids won’t get any breaks.
When the Biden Administration Announced New Student-Loan Forgiveness Scheme Last month, my social media accounts automatically flooded with sentimental statements to eligible borrowers. either side of the aisle, Some seemed enthused by the idea of eligible borrowers having $10,000 to $20,000 in federal student loan debt, while others were. afraid of thought For any apologies.
Because this issue and others like it are never black and white, I quickly found myself with mixed feelings over student-loan forgiveness—at least in its current form.
I’m happy to have eligible borrowers who are getting some of their federal student loan debt forgiven, and I have no animosity toward those who are excited to receive it. In fact, I have a nephew in college who is ready to receive forgiveness for last year’s student loan debt, and many others in my life will be much better off financially.
On the other hand, I have two kids aged 11 and 13, and I am very concerned about their future as well as the future of their peers. This is despite the fact that I have been Saving for my children’s higher education since they were kids, and I currently have enough to pay for four years of state school tuition and fees 529 account for each of them.
Why I’m Still Saving for My Kids’ College Education
While student-loan forgiveness is on its way for some borrowers, I wholeheartedly believe that parents with college-age kids should be celebrating right now. The fact is, there are many important reasons to continue saving for my child’s college education, and why those who can do so should.
Today’s waiver scheme will not help future borrowers
One big issue I have with Biden’s apology plan is that it’s a one time action Which does nothing to fix our broken higher education system. While the current plan waives up to $10,000 in debt for borrowers with most federal student loans and up to $20,000 for Pell grant recipients, this forgiveness only applies to individuals who already went to school.
Borrowers who are taking out student loans for college this year and in future years will note that these new loans are already ineligible.
That means this year’s high school students, my own kids, and everyone else going to college in the next decade will face the same affordability issues that preceded them. Sure enough, the administration has proposed a new income-driven repayment plan that pays at 5% of discretionary income instead of 10%, and they promise to make reforms for the increasingly disabled. Public Service Loan Forgiveness (PSLF) ProgramBut the help for future students largely ends here.
Interestingly, a White House press release on student loan forgiveness states that Biden’s plan is to “protect future students and taxpayers by reducing the cost of college and holding schools accountable for price increases.” ”
However, it only goes from there to explain how the administration plans to fight to double the maximum Pell grant amount and free up the community college. Since Pell grants only go to the lowest-income borrowers and community college is already affordable, these measures won’t do much to help middle-income students or those planning to attend a four-year school .
That said, the release said the Department of Education is announcing new efforts to “ensure student borrowers get value for the cost of their college,” whatever that means.
College costs likely to be higher years from now
In the meantime, however, the White House reports that the total cost of both four-year public and four-year private college is almost three timesEven after accounting for inflation since 1980. In other words, even government statistics show that the prices of higher education keep on increasing despite what one promises or says.
At this point, it’s also conceivable (and highly likely) that the average four-year degree from a four-year school would require over $100,000 in costs for tuition, fees, and room and board, by the time my most Older kids don’t reach college. really, Recent statistics from Collegeboard show that the average tuition and fees for public, four-year schools worked out to $10,740 per year for the 2021-22 school year. However, when you add up the room and board costs, One year cost increases up to $22,690.
Income limits paint a grim picture for high-income children
Another reason I’ll continue to save for my kids’ college is the fact that, like it or not, before this administration and others painted a line in the sand for potential help with higher education costs. is of. When Hillary Clinton ran for president in 2016, for example, she proposed Making state colleges and universities tuition free For students whose families earn $125,000 or less.
Biden’s forgiveness plan once again gives relief to individual borrowers with incomes of $125,000, or couples earning $250,000 or less.
It remains to be seen what income limits may apply to free college or loan forgiveness in the future, but many high earners have a right to worry that their children will be barred from receiving aid.
For these reasons and many other reasons, we are still saving for our children’s college education on a monthly basis. While today’s forgiveness plans will help a select percentage of people who had to borrow money for higher education, I don’t see anything in action that would help future college students save money in college or avoid borrowing more. will help.
And with more government funding to help pay for higher education in the future, I won’t hold my breath for reducing college costs too soon.
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