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- I am happy for those who will be relieved of some or all of their student loan debt under the Biden plan.
- But with kids ages 11 to 13, I’m more determined than ever to save up for their education.
- No respite from the high cost of college looms, and kids of high-income earners won’t get any breaks.
When the Biden administration announced a New Student Loan Forgiveness Scheme For eligible borrowers last month, my social media accounts were automatically flooded with emotional data on Both sides of the aisle. Some people seemed to be thrilled at the idea of forgiving eligible borrowers from $10,000 to $20,000 federal student loan debt, while others were terrified of the idea of any kind of forgiveness at all.
Since this and other similar issues are never black and white, I quickly found myself with mixed feelings about student loan forgiveness—at least in its current form.
I’m happy for qualified borrowers who see some of their federal student loan debt has been forgiven, and I have no animosity toward those eager to get it. In fact, I have a nephew in college who is due to get student loan debt relief the previous year, and many other people in my life would be better off financially.
On the flip side, I have two kids, ages 11 and 13, and I’m very concerned about their future, as well as the future of their peers. This despite the fact that I was Saving for higher education for my children Since they were children, I currently have enough to pay for four years of tuition and public school fees in a 529 accounts for each one of them.
Why am I still saving for my kids’ college education
While student loan forgiveness is on its way for some borrowers, I honestly think that parents with kids nearing college age should postpone the celebration now. The truth is, there are many important reasons I will continue to save for my child’s college education, and why those who can afford to do so should do the same.
Today’s forgiveness scheme won’t help future borrowers
One of the big problems I’m having with Biden’s forgiveness plan is that One time work It does nothing to fix our broken higher education system. While the current plan forgives 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 have already gone to school.
Borrowers who take out student loans for college this year and in the years to come will notice that this new debt is already ineligible.
This means that this year’s high school students, my kids, and anyone else going to college in the next decade will have the same affordability issues as those who came before them. Sure, management has proposed a new income-driven payment plan based on payments of 5% of discretionary income instead of 10%, and they promise fixes to increasingly ineffective people. Public Service Loan Forgiveness (PSLF) Programbut helping students in the future largely ends there.
Interestingly, the White House press release on student loan forgiveness says Biden’s plan is to “protect students and future taxpayers by reducing the cost of college and holding schools accountable when they raise prices.”
However, it only goes on from there to explain how the administration plans to fight to double the maximum Pell Grant amount and make the community college free. Because Pell Grants only go to low-income borrowers, and community college is already quite affordable, these measures won’t do much to help middle-income students or those planning to attend a four-year school.
However, the statement says the Department of Education is “announcing new efforts to ensure student borrowers receive value for their university costs,” whatever that means.
College costs are likely to be years higher than now
Meanwhile, though, the White House reports that the total cost of both a public four-year college and a private four-year college has Almost tripledeven after accounting for inflation since 1980. In other words, even government statistics show that higher education prices continue to grow despite what anyone promises or says.
At this point, it is conceivable (and very likely) that the average four-year degree from a four-year school will require over $100,000 in tuition, fees, and room and board costs by the time my oldest child reaches college. In fact, Recent stats from CollegeBoard Show that the average tuition and fees for four-year public schools came to $10,740 per year for the 2021-22 school year. When you add room and board costs, the The cost of one year goes up to $22,690.
Income limits paint a bleak picture for high-income children
Another reason I will continue to save at my children’s college is the fact that this administration and others before it have drawn a line in the sand when it comes to potential help with higher education costs, whether I like it or not. When Hillary Clinton ran for president in 2016, for example, she suggested Make public colleges and universities exempt from tuition fees For students whose families earn $125,000 or less.
Once again, Biden’s forgiveness plan limits the exemption to individual borrowers with an income of $125,000, or spouses who earn $250,000 or less.
It remains to be seen what kind of income caps may apply for free college or loan forgiveness in the future, but many high-income earners are right to worry that their children will be prevented from receiving assistance.
For these and many other reasons, we still save on our children’s college education costs on a monthly basis. While today’s forgiving plans will help a select percentage of people who have had to borrow money for higher education, I don’t see anything in the works that will help college students in the future save money in college or avoid excessive borrowing.
And with more government money pledging to help pay for higher education in the future, I’m not going to hold my breath as the cost of college is going down anytime soon.
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