With some 40 million Americans impacted—nearly all of them of voting age—student loan debt emerged as a key political campaign issue in 2015. Most of the presidential candidates now have proposals offering varying degrees of relief to address it. As Election Day nears, and voters continue to press the issue, the potential for substantial change could gain momentum.
In fact, a new poll from Young Invincibles indicates that nearly two-thirds of Millennials who intend to vote say that where a candidate stands on student loans will strongly influence how they end up voting. Also, with outstanding student loan debt now topping $1.3 trillion and rising at the rate of $2,726 per second, student debt as a percentage of total household debt has become too large to ignore. It is now the second-largest household debt category, eclipsed only by mortgages, according to the Federal Reserve Bank of New York.
While this outstanding balance is expected to continue climbing, reducing the rate of default seemingly has top priority, given the damage it does to the finances of already financially stressed borrowers. The federal repayment programs now include income-based options for student borrowers at every income level to help ease default by making repayment more affordable. But, further changes are being discussed to lessen the burden student loan repayment places on household budgets…and the economy at large.
Changes to the Free Application for Federal Student Aid (FAFSA), which will start to take effect in 2016, are another step toward addressing the root causes of the situation. These are intended to help prospective students make more informed and timely decisions about their financial aid options. This could lead more students to fund through federal programs, which tend to be more affordable and offer greater repayment flexibility than private-financing options.
A closer look at the practices of for-profit schools and the financial burden they’ve created for some of their students led to federal legal action in 2015 against some of the corporations involved and debt relief for many of these students. Inquiries are ongoing and could result in more at-risk borrowers qualifying for debt forgiveness due to fraud on the part of their schools.
As change continues to be introduced into the student loan arena, you can rely on NFCC Certified Consumer Credit Counselor to help you determine how those changes may impact your own decisions. As nonprofit consumer advocates, our member agencies are singularly focused on what makes sense for you and your particular situation. Find out how we can help you here.