The impact of the loan forgiveness on Latinos
About half of all Latino borrowers should have their entire debts forgiven.
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On Wednesday, President Joe Biden announced the cancellation of up to $10,000 in federal loan debt. An additional $10,000 can be added if the student was a Pell Grant recipient — earning less than $125,000 a year as an individual or less than $250,000 as a couple filing taxes together.
The Biden administration also extended the payment pause, which will resume in January 2023, and set a cap repayment of 5% of one’s monthly income.
According to NBC News, almost half of Latino student borrowers will have their entire debts forgiven after this week’s announcement.
Excelencia in Education stated that among Latino undergraduate students who began their postsecondary education in 2012, 51% borrowed funds to pay their studies. Of those Latinos, 23% took out loans under $10,000 and 26% received loans of between $10,000 and $50,000.
The student debt has such an important impact on students' lives that 33% Latino student borrowers put off marriage and 37% delayed having children because of it. According to the Education Data Initiative, 67% of Latino student borrowers have educational debt.
Most Latino students in postsecondary education not only come from low-income families, but are also first generation college students. A UnidosUS study stated that more than half of low-income students from Arizona, Texas and California said they are the first in their families to take out student loans.
Of the 1,200 Latino students surveyed across those states, 38% reported they owe an average of $17,000; and 42% said that they have defaulted on their student loans at least once. According to Excelencia in Education, Latinos are more likely than their non-Latino white counterparts to default on their loans — 35% compared to 20%. The rate increases by 5% for those who didn't complete their degree.
More information will be disclosed on eligibility, which will be based on income in the 2020 or 2021 tax year, and how to apply during the upcoming weeks.