March 2020. Faced with the Covid-19 pandemic, then US President Donald Trump decrees a moratorium on student loan repayments in a country where university tuition fees can easily run into the tens of thousands per year.
This breath of fresh air for millions of Americans is then extended by Trump’s successor to the White House, Democrat Joe Biden, who goes even further.
Taking up a campaign promise, Biden announces in the summer of 2022 that he wants to wipe out part of the slate for some, at least $10,000, according to income criteria. Total cost of the measure: more than 400 billion dollars.
But at the end of June, the very conservative Supreme Court invalidated this flagship measure by Joe Biden aimed at canceling part of the colossal student debt, considering that the government had exceeded its powers by adopting this costly program without authorization from Congress.
As a result, reimbursements must resume in October…
But this return to reality might prove difficult for Americans who have since taken on new financial obligations, explains to AFP Tisa Silver Canada, founder of the Maryland Center for Collegiate Wellness, an organization specializing in financial education. to students.
“People who had this disposable income were able to use it to, for example, buy a house or a car”, she raises. “Now I’m just afraid that for some people it’s too much… We’re seeing people start to worry.”
46 million student loans
In the United States, more than 46 million people have a student loan, and the total outstanding amount exceeds 1.6 trillion dollars, according to data from the Ministry of Education.
The Supreme Court’s decision will force many of these households to review their budget.
“It was disappointing but not surprising,” Tiffanie Brown, 43, a resident of the Baltimore (Maryland) region, not far from the federal capital Washington, told AFP regarding the decision of the highest court in the country.
Tiffanie’s debt exceeds $100,000. But she is one of those who have been able to restructure their loan, and, depending on their income, manage to temporarily reduce – sometimes to zero – their monthly payments.
However, the debt is not erased. Often it even increases as the interest accumulates. If their income increases, repayments will resume, or the amount of their monthly payment will be increased.
Alleviate
Debt is nearly $36,000 on average per student loan taker, according to an AFP analysis of data from the Department of Education.
Since the Supreme Court’s decision, Joe Biden has presented a new measure, the “Saving on a Valuable Education” plan, aimed according to the White House at “to relieve as many borrowers as possible as quickly as possible”.
Depending on their income, some borrowers might see the bill cut in half. As for loans of $12,000 or less, the remaining balance would be canceled following ten years.
This new plan should significantly reduce the cost of reimbursement for the 20 million people who the White House says might benefit from it.
Certain measures already exist to reduce, or even cancel, the debt of certain students who embrace a career in the public service or in the voluntary sector. But the criteria are restrictive and can vary according to the presidents.
“That can change from year to year, from administration to administration,” deplores Tiffanie Brown, who hopes one day to see at least part of her debt disappear.
