What does student loan forgiveness mean for debt relief?

President Joe Biden has made progress on a campaign promise to provide relief for those burdened with student debt.

The announcement made big waves politically and media coverage is heavy with reactions to the plan and just who it will benefit.

“For some students, they will be completely debt-free afterward,” said Dr. Wendy Habegger, a lecturer of finance in the Hull College of Business at Augusta University.

“The majority are still not going to be debt-free but instead of you having to pay an extra year, it might cut your pay time down. What this is going to do is give you money to start doing some of the other things that you have put off. You can now focus on building up an emergency fund, building up a savings account. You can put it toward your retirement.”

The announcement also includes extending the student loan pause a final time through Dec. 31, 2022.

“One of the good things about this debt reduction and debt forgiveness is that the Biden administration is making some very firm attempts to go in and fix some of the payment programs that are broken. So when individuals have to start paying in January, they will be able to pay a reduced amount,” said Habegger.

“What’s not going to stop is the accrual of future debt. So we really need to look at the underlying problem and the costs of higher education and see if we can bring that down.”