7.8 million people at the age 24 or younger currently have $115.50 billion in student loan debt.
According to Erudera.com, every individual borrower included in this age group has an average balance of $14,807.69, the Department of Education Q4 2020 data have revealed.
The average debt load of student loan borrowers of all ages reaches the amount of $39,351. Despite the fact that it is more than double what students at the age of 24 and younger have, this group of borrowers still has years of interest accumulating ahead of them.
Many of these borrowers take more debts after completing their undergraduate studies and decide to pursue additional education.
Among the key things that these borrowers should know and expect when wanting to pay their loans during 2021 is the interest rate, which students must calculate before borrowing a loan.
Student loans begin accruing interest daily once the loan is paid out. Yet, there is an exception to this, which is the direct subsidized federal loans where the loan interest is paid by the federal government during a period of time when the student is still pursuing studies or the loan is deferred.
Besides, by refinancing student loans which means a private lender will pay off the current loan and replace it with one loan with a new interest rate, students can be able to lower the interest rate.
Regarding borrowers who carry federal student loans, and have interest freeze on student loan payments until at least September 202, they should not refinance during this period of time. Due to COVID-19, federal student loan payments are currently suspended; therefore, the interest rate at the moment is set to 0 percent.
Most recently, Biden’s nominee for Undersecretary of Education, James Kvaal, said that Biden is planning the student loan cancellation based on three pillars, which include:
- Student loan cancellation due to the COVID-19 pandemic
- Public service loan cancellation
- Cancellation for low-income borrowers holding high student loan debt
Not so long ago, the US Department of Education announced the expansion of the zero percent interest rate on federal student loans and collections of borrowers defaulting loans in the FEEL program.
The Department also announced debt relief for student borrowers who were discharged due to permanent disability, an action that ensures borrowers they are not obliged to have their debts reinstated if they have not managed to provide income information amid pandemic.