July 7, 2023
Consider These Time-Sensitive Options For Student Loan Relief To Erase Debt
author of Wealth Secrets. Canady shares in the book how she helped a Black woman student loan borrower wipe out $92,000 of debt last year.
Canady connected with BLACK ENTERPRISE to discuss the court’s ruling.
How does this decision make building wealth for Black Americans harder now than before?
Although white borrowers outnumber their Black counterparts, Black borrowers typically borrow more often and in larger amounts, and experience greater difficulty in repayment. Black borrowers typically take longer to repay the debt, and the accrual of interest during the extra time makes the debt much more expensive for them.
Several factors contribute to these disparities, including a persistent wage gap that affects Black women the most. Black women also tend to pursue advanced degrees more often leading to elevated levels of debt. With lower income prospects–even with an advanced degree–the financial hole becomes even deeper.
What are some tips to help Black students repay outstanding loans or make them more affordable?
After a three-year pause, payments will resume in October. Be ready by going to studentaid.gov and taking inventory of your loans. Take note of your servicers and make certain they have up-to-date contact information for you. Look at the repayment plan you are enrolled in and determine if it’s affordable. If it’s not affordable, contact your servicer to discuss your options including income- driven repayment plans and use the studentaid.gov Loan Simulator to review your options.
For long- time borrowers who have non-Direct Loans, consider consolidating them through studentaid.gov by 12/31/23 to get the greatest benefit toward cancelation through Income-Driven Repayment (IDR). Borrowers with loans from the late 90s and early 2000s could already have the number of years in repayment needed to get their debt canceled.
What actions should borrowers in default consider?
Look into the Fresh Start Initiative at studentaid.gov. It provides an easier-than-usual path toward good standing and away from collections activity. Borrowers who work for the government and some nonprofits can have their remaining balance canceled after 120 months of employment and repayment through Public Service Loan Forgiveness (PSLF). Borrowers who pay using IDR plans can have their debts canceled after 20 or 25 years of repayment. Both PSLF and IDR have temporarily relaxed rules that can still help borrowers get closer to eradicating their federal student loan debt.
We hear Biden presented some new alternatives after the Supreme Court’s decision that could help Black American students. What is your take on that?
As far as broad cancelation benefits, there is not enough information to tell. The White House says the process is set to begin with a public hearing in mid-July. Issues to be addressed will be determined after the hearing and then rulemaking sessions will happen this fall.
However, the new repayment plan, “SAVE,” offers a more affordable payment plan. This plan is new so borrowers should visit studentaid.gov for more details.