If you are a student loan borrower, you could see big changes in 2020 pertaining to your loan interest, repayment, and refinancing. You may see that you have less debt and may have different options to repay it. There could potentially be big changes that positively affect you as a student loan borrower.
Debt forgiveness could potentially be possible given 2020 is an election year. Democrats running for President of the United States were interested in just that. Although they are no longer in the running, Senator Bernie Sanders and Senator Elizabeth Warren both introduced ideas for student loan debt reformation. Sanders asked for debt to be erased for all loan borrowers. Warren suggested forgiving student debt on a sliding scale based on income. For student loans to be forgiven, the proposed solution will need to gain bipartisan support.
Student loan debt is an important economic issue for millions of Americans like you who must repay their loans. Education Secretary Betsy Devos has expressed concern that there is a crisis in higher education. Americans have more education debt than credit card and auto debt. College graduates leave school owing an average of $30,000. Twenty years ago, it was $10,000 less. It is common for student loans to be paid back over multiple decades, well past graduation, by borrowers like yourself.
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There is $1.6 trillion in federal student loans in America. You, like many, may feel as if you are drowning because of student loan debt. According to the Education Department, 40% of student loans taken out in 2004 will be defaulted on by 2023. Half of borrowers are only paying the interest on their debt five years after graduation. Last year, the Education Department considered selling to private investors all or portions of the outstanding student loan portfolio.
In 2020, the federal government may offer income-sharing agreements. These contracts would allow you to not have to pay anything back until a job is secured after graduating. You would then owe a certain percentage of your income for a set amount of years. This may or may not be a good solution to the debt crisis, as it is simply another way to borrow.
Changes to The Higher Education Act are likely to take place this year. House Democrats introduced their plan to overhaul the bill that controls the ins and outs of federal student aid. The number of student loan repayment plans could be lowered to just two options, opposed to the current 14 ways. Spreading your monthly payments across a decade or capping monthly payments at a percentage of your income are the two options being considered.
In 2020, your student loan interest rate could be lowered. Refinancing your debt may also be made easier. If you are in default on your loan, once you are out, it may be cleared from your credit reports. The allowance of student loan debt to be discharged in normal bankruptcy proceedings may be made possible.
It will be up to both Republicans and Democrats to agree on what the federal government can assist with pertaining to your student loan debt. With changes that may be coming in 2020, you will have a chance to finally get rid of your debt and move on to living your life without student loan payments.