BATON ROUGE, La. (BRPROUD) – How many people in Louisiana will be affected if student loan debt is forgiven or not?
There are 651,700 student loan borrowers in Louisiana and over half of those borrowers are younger than 35. Data from the White House reported that 381,000 applied for the president’s student debt relief plan.
In total, there is about $22 billion in student loan debt for the state, and the average loan debt for a Louisianian is over $34,000.
Most college students who graduated in 2021 and after might not know how student debt repayments work or where to begin. The Supreme Court recently heard arguments over President Joe Biden’s student loan debt relief plan but isn’t expected to rule for months. Here’s where Louisiana borrowers can find help if it’s not OK’d.
What’s going on with the debt relief plan?
Arguments were brought before the United States Supreme Court on Tuesday, Feb. 28 and the justices have until the end of June to decide whether or not President Joe Biden can erase the debt.
MORE: Supreme Court student loan case: The arguments explained
If the plan is not passed, loan payments are expected to begin 60 days after the lawsuit or after June 30.
If the plan is passed, what will it mean for someone with student loans in Louisiana?
The Office of the U.S. Department of Education says if a person qualifies for full forgiveness and their application is approved, they won’t have to pay anything. If a portion of the loan is forgiven, the borrower is responsible for paying the rest.
Travis Hornsby, the founder of studentloanplanner.com, said that 381,000 student loan forgiveness applications in Louisiana have been approved, which is between $4 billion and $7 billion of student loan debt.
“So that’s what it would mean for Louisiana specifically is, you know, 16 million people have already been approved overall in the country. And then of those 381,000 are in Louisiana, and it’s probably about $4 billion to $7 billion that would be flooding into Louisiana,” he said.
What happens if the plan is blocked?
If the plan is blocked, borrowers could be paying off the loans themselves, but Hornsy said Biden is coming out with a new income-driven repayment plan that will likely be ready when student loan payments start up again.
“That plan is far more generous than existing repayment options, and it’s going to cut Louisiana borrowers’ payments significantly,” he said.
The Revised Pay As You Earn (REPAYE) was announced in January and is supposed to help reduce the cost of federal student loan payments, especially for low and middle-income borrowers.
“We think that it’s going to be super generous, more so than people realize. And the reason is because they’re doing two things,” Hornsby said. “They’re like cutting them out a percent of income people have to pay on and they’re also increasing the amount of income that people can earn before they take any money.”
A breakdown of the plan can be found here.
What does a payment plan usually look like? How does it work?
There are multiple repayment plans in Louisiana but most borrowers are eligible for the national Standard Repayment Plan.
“I think most borrowers just pay what they can afford and they pay $200 to $400 a month until they can’t afford it anymore and they go into forbearance,” he said. That’s why I think this new repayment plan is going to be so amazing.”
If a borrower signs up for the repayment plan and something happens, Hornsby said that they can call their loan servicer and ask them to recalculate it
“Then that payment can go back to zero a month and you get all your interest paid for and then forbearance you don’t get that,” he said.
Where can you find your student loan amount and how can it be calculated?
A borrower can find how much they owe and how much they are expected to pay here.
“Our student loan planner service is for people who are really frustrated about their loans and don’t know what to do and just want to pay a few $100 bucks to have a CFP expert explain what they should do,” Hornsby said.
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