With the total student debt in the United States standing more than $1.3 trillion, the Obama administration and Department of Education looks to lend aid to some. The “Total and Permanent Disability” loan will forgive $7.8 billion in student loan discharges.
According to NBC New York, on April 12, a new process was announced to better identify the hundreds of thousands of borrowers who are eligible for a federal loan forgiveness program. The program is for people who are permanently disabled and can’t work.
Letters from the Department of Education will be sent out to about 387,000 people who the agency has identified as eligible. Of those 387,000, only 179,000 have student loans that are currently in default.
Student debt reform is a major issue across the U.S. and especially in California. LendEDU, a loan refinancing information company, did a study involving 477 California undergraduate and graduate students. The study found that most young American students are unaware of even basic facts about their debt.
In the United States, about one in five (or 20% of) young Americans ages 18 to 24 years old qualify themselves as being in “debt hardship.” According to RT.com, the student debt total is already over a trillion dollars and every second the debt grows more than $2,726.
About 70% of all college graduates leave school with student loans, and the fact that they don’t have a true understanding of that debt can be frightening for some.
“The lack of literacy about the personal finances of college going is almost certainly leading some students into decisions that they later come to regret, said Matthew Chingo and Elizabeth Akers, researchers for Brookings Institution. “The consequences of their decisions come as a surprise to them once it’s too late.”
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) believes the Department of Education’s new plan is a great way to educate people about their rights and the loans that they are dealing with.
“This will come as a huge relief for people who are already struggling with the economic and financial challenges,” Liz Shuler, Secretary-Treasurer of the AFL-CIO said.