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The author, center, with her children when they were younger.
Courtesy of holly johnson
- I am happy for those who will have some or all of their student loan debt forgiven through biden's plan.
- But with children ages 11 and 13, I'm more determined than ever to save for their education.
- There is no relief in sight from high tuition costs, and children of high earners don't get a break.
When the biden administration announced a new student loan forgiveness plan for eligible borrowers last month, my social media accounts were automatically flooded with passionate statements on both sides of the aisle. Some people seemed enthusiastic about the idea that eligible borrowers would have 10.000 to 20.Have US$000 in government student loan debt forgiven, while others were horrified at the idea of any kind of forgiveness at all.
Since this and similar issues are never black and white, I quickly found myself with mixed feelings about student loan forgiveness – at least in its current form.
I am happy for eligible borrowers who will have some of their federal student loan debt forgiven, and I have no animosity toward those who look forward to receiving it. In fact, I have a nephew in college who will have his student loan debt forgiven from the previous year, and several other people in my life will be much better off financially.
On the other hand, I have two children, ages 11 and 13, and I am very concerned about their future as well as the future of their peers. This despite the fact that I have been saving for my children's higher education since they were babies, and I currently have almost enough to pay four years of in-state tuition and fees in a 529 account for each of them.
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Why I'm still saving for my kids' college education
While student loan forgiveness is on the way for some borrowers, I wholeheartedly believe that parents with children approaching college age should stop celebrating now. The fact is, there are several important reasons why I will continue to save for my child's college education and why those who can afford it should do the same.
The current forgiveness plan will not help future borrowers
One big problem I have with biden's forgiveness plan is that it is a one-time action that does nothing to fix our broken higher education system. While the current plan allows borrowers with most federal student loans to borrow up to $10.000 in debt and up to 20.000 dollars for pell grant recipients, the waiver only applies to people who have already gone to school.
Borrowers taking out student loans for college this year and in the years to come will find that this new debt is already ineligible for assistance.
That means this year's high school students, my own children, and everyone else going to college in the next decade will face the exact same affordability issues as their predecessors. Sure, the administration has proposed a new income-driven repayment plan that bases payments on 5% of discretionary income instead of 10%, and they promise to fix the increasingly inefficient PSLF (public service loan forgiveness) program, but help for prospective students pretty much ends there.
Interestingly, the white house press release on student loan forgiveness says biden's plan is to "protect future students and taxpayers by lowering the cost of college and holding schools accountable when they raise prices".
From there, however, it only goes on to explain how the administration plans to fight for doubling the maximum pell grant amount and providing community college for free. Since pell grants only go to borrowers with the lowest incomes and community college is already affordable, these measures won't do much to help middle-income students or those who want to attend a four-year school.
However, the press release states that the department of education is "announcing new efforts to ensure student loan borrowers get value for their college costs," whatever that means.
College costs are likely to be higher in years to come
Meanwhile, however, the white house reports that the total cost of both four-year public and four-year private college has risen nearly threefold, even after accounting for inflation, since 1980. In other words, even government statistics show that the price of higher education continues to rise, despite what anyone promises or says.
At this point, it is even conceivable (and very likely) that the average four-year degree from a four-year school will cost more than 100.000 dollars in tuition, fees, and room and board costs required by the time my oldest child reaches college. In fact, recent statistics from collegeboard show that average tuition and fees for public four-year schools for the 2021-22 school year will increase to 10.740 USD per year amount to. However, when you add in the cost of room and board, the cost for one year increases to 22.690 $.
Income caps paint a bleak picture for the children of high-income earners
Another reason I will continue to save for my children's college is that this administration and others before it, like it or not, have drawn a line in the sand when it comes to potential assistance with the cost of higher education. For example, when hillary clinton ran for president in 2016, she made a proposal to make state colleges and universities tuition-free for students whose families had 125.000 $ or less earned.
Biden's forgiveness plan again limits relief to individual borrowers with incomes of 125.000 USD or couples with incomes of 250.000 USD or less.
It remains to be seen what kind of income caps might apply to free college or loan forgiveness in the future, but many high-income earners rightly fear that their children will be denied aid.
For these and many other reasons, we are still saving monthly for our children's college education. While today's forgiveness plans will help a select percentage of people who have had to borrow money for higher education, I see nothing in the works that will help future college students save money for college or avoid excess debt.
And with more government money pledged to help fund higher education in the future, I won't be holding my breath for college costs to go down anytime soon.