House Republicans voted to repeal President Biden’s initiative for student loan forgiveness this week, throwing more uncertainty and confusion to millions of Americans saddled with college debt.
Biden’s plan is already facing a court challenge, with the Supreme Court expected to rule before the end of its term.
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More than 43 million Americans have residual debt from the time they spend in college.
The House measure is unlikely to pass the Senate, which Democrats control narrowly. If that happens somehow, Biden has vowed to veto the measure and it would require a two-thirds vote in both chambers but could not be overcome.
But for the recipients of these loans, which many have called predation, the controversy raises anxiety about their financial future.
Deferring student loans was one of several initiatives to ease financial stress during the covid-19 lockdown. But while the payments have been deferred, and are still subject to an executive order from Biden, borrowers still receive credit for the time that has elapsed. This is important because for people who work in the public sector such as firefighters or teachers, loans can be canceled after making regular payments for a certain number of years.
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However, if the Republican plan goes into effect, these time credits will disappear along with the exemption, and payments, including late payments for the deferral period, will have to resume.
Some have noted the predatory terms of student loans. Thanks to compound interest payments and interest rates of up to 35%, many with student loans feel trapped in a cycle of debt.
Zooming out further, many commentators have been quick to point out the excessive spending that is already costing taxpayers — including defense spending. To make the point clearer, a Expose my fate He recently revealed the total overspending of Pentagon funds. In March, the Pentagon received a record $842 billion budget.
Student loan debt is $1.78 trillion in the United States. The outcome of the upcoming election cycle is likely to focus heavily on this issue.