According to a new analysis, more than 31% of Alabama residents who owe federal student loans would see that debt wiped out if the Biden administration went ahead with a $10,000 loan forgiveness.
A Lending Tree analysis showed that one in three borrowers nationwide could have all of their federal student loans forgiven, and an additional 20% of borrowers would have their balances reduced by at least half. The highest percentage was in Wyoming, where 38% would pay off all their federal student debt, followed by Nevada (36.6%) and Utah (36.4%).
Nationally, the $10,000 rebate plan would total $326.4 billion.
The analysis shows that 31.5% of Alabamians with federal student loans — about 187,397 people — would see their debt wiped out if the Biden plan continues.
“For highly indebted borrowers, the impact might be minimal, but it could potentially free others — one in three eligible borrowers, in fact — of all their federal student debt,” the national study says. “The difference is how much debt each borrower has and what kind of student loans they have.”
About 7% of all federal borrowers owe more than $100,000 in student loans. And, although direct federal loans are the most popular type, other federal student loans, such as FFEL and Perkins loans, as well as private student loans, would remain due in full, the analysis points out.
Direct federal loans would be the only type covered by the emergency forbearance enacted in response to the COVID-19 pandemic. Late payments have been extended six times with the latest deadline of August 31 to just a few weeks.
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