The office of Federal Student Aid is responsible for directly managing or overseeing an outstanding federal student loan portfolio comprised of billions of dollars in Title IV loans and representing millions of borrowers.
Typically, your college applies grant or loan money toward your tuition, fees, and, if you live on campus, room and board. Any money left over is paid to you for other expenses.
Billionaire Robert F. Smith pledged to pay off student loans for every member of Morehouse College's graduating class. The Ivy League-educated business leader made his fortune investing in software firms and other tech companies.
Robert Smith, the billionaire who went viral last year for paying off the debt of students at Morehouse College, admitted to an illegal scheme to conceal income and evade taxes by using offshore trusts and bank accounts for 15 years.
Black women owe a disproportionate amount of student debt. They hold 43% more undergraduate debt and nearly 99% more graduate school debt than their white woman counterparts 12 months after graduation, according to an April 2022 study by the nonprofit organization The Education Trust.
Student loans are owned by the federal government or private institutions, depending on the type of student loan. Federal student loans are owned by the U.S. Department of Education while private student loans are owned by the financial institution that granted them.
Federal student debt is discharged upon the death of the borrower. Many private lenders will also cancel debt when the borrower dies, but policies vary by lender. Loved ones or spouses can't inherit student loan debt.
Large amounts of student loan debt can reduce economic activity in a consumer economy in many ways. For individuals, it can strain your personal budget, which can result in you spending less. As part of a larger trend, this would lead to less spending, which is a major factor in economic growth.
Mostly the U.S. government. According to the office of Federal Student Aid, $1.62 trillion, or 93% of all student loan debt, is federal student loans. The remaining $131 billion (7%) is owed to private lenders, according to this Q3 2021 report from MeasureOne.
Today's student debt problem can be traced to the 1960s, when California Gov. Ronald Reagan cut higher education funding and raised tuition. Once considered a public good, higher education became seen nationwide as a private commodity.
Federal student loans and federal parent loans: These loans are funded by the federal government. Private student loans: These loans are nonfederal loans, made by a lender such as a bank, credit union, state agency, or a school.
20% of U.S. adults report having paid off student loan debt. The 5-year annual average student loan debt growth rate is 15%. The average student loan debt growth rate outpaces rising tuition costs by 166.9%. In a single year, 31.5% of undergraduate students accepted federal loans.
“Four years ago, President Biden made a promise to fix a broken student loan system. Today, life-changing student debt relief is possible for more than five million borrowers—more than any other administration in history,” said U.S. Secretary of Education Miguel Cardona.
The Supreme Court blocked the pandemic-related student loan debt relief (you may also know this as the forgiveness of up to $20,000 for Federal Pell Grant borrowers recipients). But you may be able to get help repaying your loans, including full loan forgiveness, through one of the federal student loan programs.
If a borrower dies, their federal student loans are discharged after the required proof of death is submitted. The borrower's family is not responsible for repaying the loans.
Medical debt and hospital bills don't simply go away after death. In most states, they take priority in the probate process, meaning they usually are paid first, by selling off assets if need be.
Impact on Co-signers and Guarantors
If the borrower passes away, the responsibility for repaying the loan immediately transfers to the co-signer or guarantor. This shift in obligation occurs as soon as they contact the bank or financial institution to continue the repayment process.
If your monthly payment does not cover the accrued interest, your loan balance will go up, even though you're making payments. Unpaid interest will also capitalize each year until your total balance is 10% higher than the original balance. This means you will pay interest on your interest.
Out of the multiple countries we examined, the United Kingdom and the United States hold the record for the highest average student loan debt. In England, students graduate with an average student loan debt of over $54,000, while in the U.S. students have an average of $28,400 at graduation.
Approximately three-quarters of Black- and White-headed families have debt, but the median debt-to-asset ratio is 50% higher among Black than White families (Copeland, 2020), with Black borrowers less likely to fully repay loans (Brevoort et al., 2021).
Higher percentages of Black (88 percent) and American Indian/Alaska Native (87 percent) students received grants than students who were of Two or more races (79 percent), White (74 percent), and Asian (66 percent).
Black students must borrow more to pay for college, they are twice as likely to default on their loans, and their debts last far longer than those of white borrowers. Failing to recognize that student debt does not pay for itself, many policymakers have neglected these racial impacts.