GUEST COLUMN: Facts to consider about loan forgiveness and paying for college

Published 8:00 am Wednesday, September 14, 2022

By Treasurer David McRae | Guest Columnist

The President’s loan forgiveness plan is controversial.

Some argue that if the federal government has bailed out corporations in the past and provided trillions in pandemic relief, we should be able to afford to forgive some student loans. Others believe if you borrow money, you should pay it back, that gainful employment is the only loan repayment program needed, and this simply transfers student loan debt from 13 percent of Americans who have it to the 87 percent who do not.

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Regardless of how you feel about it, there are facts about the proposal you should know in order to plan to pay back your own student loan debt or to plan to send loved ones to college. It’s important to first remember the proposal was not passed by Congress and signed into law. Rather, it’s an executive order that could potentially face legal challenges, and that creates some uncertainty.

Putting the controversy and uncertainty aside, let’s take a look at what the program would do and who would be eligible. The Biden plan would cancel up to $10,000 in federal student loan debt for most borrowers who fall below certain income limits and up to $20,000 for borrowers who received a federal Pell Grant. The plan would also extend the pandemic-related pause on federal student loan payments and interest through the end of this year. The Administration has laid this all out in detail on a website run by the U.S. Department of Education at https://studentaid.gov/debt-relief-announcement/. If you or a loved one may qualify, visit that website to get all the information on how to apply.

It is estimated that 45.4 million American borrowers hold a total of $1.6 trillion in student loan debt, or about $35,000 per borrower. This program will not relieve all of that debt for all of those borrowers, nor will it alleviate the challenges that created this debt in the first place. Those challenges include the fact that tuition costs have been increasing faster than inflation for years and remain unchecked.

Even if the Biden plan comes to fruition and benefits some borrowers now, it would be imprudent to count on this program going forward, given the costs and controversy surrounding it. Not to mention — $10,000 or even $20,000 — is only a fraction of the cost of college today. That’s why I am continuing to encourage all Mississippians to participate in our state’s two college savings programs.

Enrollment for MPACT is open now through May 31 (and year-round for newborns). MPACT is shorthand for Mississippi’s Prepaid Affordable College Tuition program. This program allows families to pre-pay college tuition (in part or in whole) and lock in today’s tuition rates. It provides protection against inflation and ever-increasing tuition rates. It’s also very flexible regardless of whether your child or loved one attends a two-year or four-year institution, in-state or out-of-state.

There’s also MACS — Mississippi’s Affordable College Savings. These are tax-advantaged savings accounts that can be opened for as little as $25 to begin saving money and earning interest to pay for college.

While September is officially College Savings Month, every month at your State Treasury is College Savings Month. We are always here to help, answer questions, and hopefully sign you and your loved ones up for these life-changing plans that will help avoid student loan debt in the future.

Call our office at (601) 359-5255 or visit Treasury.MS.gov to learn more.

Mississippi Treasurer David McRae is the 55th Treasurer for the State of Mississippi.