Students are graduating with $1.3 trillion in student loan loans, and they’re getting a huge chunk of that debt from their parents.
In fact, a whopping 80% of Americans over the age of 30 are either in default on their student loans or have their loans forgiven by their parents within the next year.
This debt is crippling for many students, but it’s also going to be a big challenge for those who are able to get out of debt.
Here’s what you need to know about the new loan forgiveness program that President Trump signed into law earlier this month.
Student Loan Debt Is Growing By 60% A month ago, a little over 40% of all American college students had student loan balances of more than $1,000.
As of February 15, that figure was rising again to nearly 50% and now stands at around 65%.
While this number is likely higher than it has in the past, it’s still quite alarming for the many students who are in default.
For those who aren’t aware, the terms of this forgiveness program are pretty vague.
Basically, under the new plan, borrowers will get a loan reduction of 10% on their debt and then will be able to refinance their loans, with interest rates of no more than 2.5%.
The federal government has already given away about $3.5 trillion to borrowers through this program, but the Trump administration plans to offer an even bigger payout in the form of a 10% loan forgiveness to eligible borrowers who make less than $100,000 a year.
For instance, if you make $80,000 and make payments of $1 on a $100 loan, you’ll be able receive $1 in forgiveness.
If you make less that $80 million, you will only receive $600, but if you earn more than that amount you’ll receive a whole $1 million in loan forgiveness.
This forgiveness is likely going to provide some relief to borrowers, but for those looking to get ahead in their education, it may be the best deal they’ll get.
If You’re Not Afraid to Pay off Your Student Loans If you’re a current or former student who is a little unsure about how much you’re willing to pay, there are a couple things you can do right now to help you out.
First, if your loan is currently delinquent, you should contact the Department of Education to see if you’re eligible to get a reduced interest rate.
If not, there’s no need to worry.
The Department of Labor has recently issued guidance that states that the interest rate will be reduced to 4.75% for new loans, but they only apply to borrowers who have a current loan balance of more to $2,000, which means that if you owe a lot of money, the interest is likely to be lower.
The fact that the Department has recently been issuing this guidance means that the new forgiveness program is more forgiving than many other forgiveness programs, but this program is not a magic pill that will solve all your problems.
It’s still better than nothing, but you might want to think about getting this information out now.
Also, if that interest rate you’re currently paying is too high, the Department is offering a 5% discount on your next loan payment.
The best part of this program right now is that it doesn’t apply to anyone who is currently enrolled in school, and borrowers who are currently enrolled can still apply for forgiveness.
What This Means for You There’s only so much you can really do right away to avoid this debt, but there are some ways you can lower your interest rates, as well as get some additional help in refinancing your student loans.
If your student loan balance is $1 or less, you can refinance your loans with a 5-year adjustable rate that’s going to lower your monthly payments by about 30%.
You’ll also get an additional $500 to help pay for other things you might need to pay off.
If, on the other hand, you have more than a $1 trillion in debt and are a little worried about paying it off, you might consider applying for a 30-year fixed-rate refinancing.
This will lower your principal and interest rate by an additional 15%.
If you apply for this, you won’t be eligible for the $1 billion forgiveness offer, but that’s okay because the Department will only lower your payment by an extra 5% over the loan.
It will also help you pay off any remaining debt if you can get out and do some serious debt-management work.
For more on refinancing student loans, check out our detailed guide.
Also if you want to get some help paying down your student debt while you’re still in school and get some advice from some of the best lenders in the country, check our guide to student loan refinancing and debt relief.
For Your Next Loan, This Is Your Last Chance!
There’s still a lot that you can’t do right off the bat, and