A recent study conducted by Sallie Mae's annual How America Pays for College report revealed that nearly half of student loan borrowers, 48%, expect debt forgiveness in the future. The study, which included 1,000 undergraduate students and 1,000 parents of undergraduate students, highlighted the growing expectation among borrowers that the government will excuse them from their education loans.
While there are options available for debt relief, consumer advocates caution against making borrowing decisions solely based on the assumption of future debt forgiveness. This warning comes in light of the fact that many student loan borrowers did not receive debt cancellation when President Joe Biden's plan to forgive up to $20,000 in student debt per borrower was rejected by the Supreme Court last summer.
The upcoming presidential election also adds uncertainty to existing student loan forgiveness programs, as President Donald Trump previously called for the elimination of the U.S. Department of Education's loan relief programs. The Biden administration's new affordable repayment plan, known as SAVE, is currently on hold due to legal challenges.
Financial experts advise against overborrowing, as it can lead to financial and psychological consequences. Borrowing for college should be done cautiously, with a plan in place to ensure responsible borrowing. Experts recommend not borrowing more than one expects to earn as a starting salary, and considering colleges based on the net price after factoring in aid that doesn't need to be repaid.
Overall, the study highlights the growing expectation among student loan borrowers for debt forgiveness, but emphasizes the importance of responsible borrowing and caution when making financial decisions related to education loans.