Student Loan debt – Memphis Flyer

The option to buy a home, along with options on other major life decisions, could soon be a reality for Gen Zers and millennials thanks to some student debt relief.

In an article published in the Memphis Flyer in June, Amy Schaftlein of United Housing stated that people who fall in this age category are opting to stay out of the housing market, due to its highly competitive nature.

“With an overly competitive real estate market with millennials and Gen Zers not able to get in because it’s too competitive to get a home loan, many people gave up,” Schaftlein said. “Even millennials with a higher income represent a huge increase in the amount of rent applications.”

Schaftlein also mentioned that a number of things contribute to younger people not being able to qualify for loans in a timely manner, such as student loan debt.

However, with the announcement of student loan forgiveness, could this mark a shift in how millennials and Gen Zers approach life after college?

President Joe Biden recently announced that he is forgiving up to $20,000 of federal student loan debt. Those who received Pell Grant will have up to $20K forgiven, while other borrowers can have up to $10K forgiven. According to a fact sheet by the White House, this relief is only available if the borrower has an individual income of less than $125K, { “250K for married couples.”}

Alanna Spears is currently a senior at the University of Memphis studying biology. When the Biden administration made the announcement, Spears, like many others, shared her excitement on social media, and how this will positively impact her future moving forward.

“I want to buy a house one day, and student loans are looked at in debt to income ratio when applying for mortgages,” Spears said. “Even if only half of my debt is cancelled, that significantly lowers my debt to income ratio, which could be a determining factor in if I get a house or not. With rising housing costs, my fiancé and I want to buy a house in the next few years and debt cancellation has made that dream a possible reality for us.”

Redfin reports that the median selling price for a home in Memphis is $188K. The U.S. Census stated that as of July 1, 2021, the median household income is $41,864.

Spears said that she and her fiancé are now able to plan for the future, and realistically save and plan for their goals.

According to the White House, 43 million borrowers will benefit from student loan relief. The White House also estimates that at least 20 million people will have their total debt canceled.

Information compled by the the Education Data Initiative reports that more than 862,000 people in Tennessee have student loan debt, and that the average borrower has about $36,418 in debt. State residents have a total of $31.4 billion in student loan debt.The site also states that 51.8% of borrowers are under the age of 35.

As a result of this announcement, the Biden administration extended the student loan repayment pause through December 2022, with repayments expected to resume in January.

A college education should not be only for the lucky few, but should be an opportunity for all those with skill and determination. Given the opportunity to better themselves through higher education, individuals can provide for their families and strengthen our country. A college degree is also becoming essential to a growing number of jobs in the new 21st-century economy.

Congressman Steve Cohen

But with college tuition growing rapidly, the doors of opportunity are closing on more of today’s students. Indeed, tuition rates at four-year colleges and universities have risen over 32 percent in the last decade as a direct result of falling support for higher education by states. This is driving many young Americans to assume historically high levels of student debt. Student loan debt now exceeds credit card debt in the U.S., creating a large burden on graduates.

The problem will only get worse if Congress does not act soon. On July 1, 2013, interest rates on subsidized Stafford students will double, from 3.4 percent to 6.8 percent. Congress extended the 3.4 percent rate last year through the 2012-13 academic year, but it is now scheduled to double to 6.8 percent on July 1st. This will increase costs for more than 7 million students. Every year that Congress doesn’t act to block this doubling will cost these students $1,000.

Students and families cannot wait any longer to know how much they will owe on their student loans in the coming academic year. The House Republican leadership must quickly bring up legislation to prevent the doubling of these student loan rates.

With the job market still recovering and interest rates for banks at historic lows, we should not be asking students with the greatest need to be burdened by higher loan costs.

Democrats in Congress overhauled the college student loan program — ending a flawed system that gave away billions in federal subsidies to private banks that simply acted as middle-men and putting those taxpayer dollars directly in the hands of students to pay for their education.

There is no good reason to allow rates for students to double at this time. Now we need to take the next step and prevent this looming rate hike on July 1st. Further, Congress should restore fair treatment to Americans in severe financial distress whose debts include private student loans.

Unlike federally backed student loans, many private loans have variable interest rates with no caps. Nor do they have the same deferments or other critical consumer protections associated with federal student loans. This may make it difficult for recent graduates who are looking for jobs or are entering the workforce in entry-level positions to keep their loans in good standing.

Before 2005, private student loans issued by for-profit lenders were appropriately treated like credit card debt and other similar types of unsecured consumer debt in bankruptcy. Then, without any hearings, Congress changed the bankruptcy law to make private student loans made by private, for-profit lenders extremely difficult to discharge in bankruptcy.

Congress should act immediately to pass my bill, H.R. 532, the Private Student Loan Fairness Act, to give Americans the same protections on private student loans that they had just a few short years ago.

Student loans should be an investment that pays off — and can be reasonably paid off. Unlike Pell Grants, which provide a vital benefit to low-income families and students, student loans also benefit many middle-class families who need our support. Failing to pass these pieces of legislation will make it harder for smart, hard-working Americans to join and stay in the middle class.

Making college more affordable is vital to fostering America’s economic competitiveness. Business leaders know it is vital for many young Americans to be educated beyond high school. If more of today’s students cannot afford college, businesses will not have the workers with the education and training they need to keep our economy competitive and dynamic far into the future.

Making college more affordable and ensuring that recent graduates will not be unduly burdened by student loans are keys to America’s economic future. Let’s stop the interest rate hike, allow private student loans to be discharged in bankruptcy, and ensure that reasonable financial aid opportunities are available to current and future students.

U.S. representative Steve Cohen (D-Memphis) represents the 9th Congressional District of Tennessee.