As a direct descendant of enslaved individuals, I have voted in every election since I came of age. I owe it to myself and the many who fought and died for me to exercise this right.
I am looking for candidates who support policies that are close to my heart: education, infrastructure, climate change and, most importantly, financial issues.
Given the recent turmoil in the presidential race, it is crucial that you consider Which candidate is better for your wallet? How will the two major parties fix Social Security? And what about health care? In America, access routinely divides the haves and have-nots, prescription drug prices can be prohibitive — especially for seniors — and a major medical crisis can bankrupt a family.
What about state and local elections? Which names on the ballot reflect your financial interests or those facing economic uncertainty?
Take, for example, the political battle over student loan forgiveness.
At the end of the second quarter, nearly 43 million borrowers owed $1.6 trillion in federal student loan debt, according to the Education Data Initiative. The average balance was $37,853.
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The average debt may not seem insurmountable, but as payments are spread out over years and interest piles up, it can become a burden for many Americans.
To encourage people to pursue a college education, a massive loan machine was created, forcing teenagers to take out loans that they could not pay off as young adults.
When students couldn’t borrow enough, higher education institutions and lenders tried to convince parents to take out loans, promising that they were good investments for their children. For many parents, this resulted in decades of student debt; some are still in debt trying to pay it off as they head towards retirement.
In some cases, students don’t have a degree or a decent job to cover the debt. Lenders advised others to defer their loans or put them in forbearance, which then caused the debt to explode due to the interest capitalization.
A deferment or forbearance allows borrowers to stop making their monthly payments. benefits if they meet certain criteria, such as economic hardship.
Balances grow when a borrower’s monthly loan payments don’t cover the interest. Unpaid interest is added to the principal and then applied to the new, larger loan balance. In this way, the debt grows over time and the monthly payment can become unmanageable.
Interest is the death knell for many financial ambitions: building an emergency fund, buying a house or investing for your retirement.
In the short term, deferment or forbearance can be helpful if you are struggling and need a financial break. But in the long term, payment holidays can be brutal as you pay interest on interest.
Some relief is needed, and the Biden administration has rolled out large-scale debt forgiveness plans for millions of Americans who took out federal student loans.
One plan that could come to the rescue is a new income-driven repayment program called the Saving on a Valuable Education (Save) Plan. Like other income-driven repayment plans, Save calculates monthly payments based on a borrower’s income and family size.
This program is a game changer when it comes to addressing the problem of interest rate capitalization.
Under Save, the Department of Education will not charge monthly interest that is not covered by the borrower’s payment. This means that people who pay what they owe — even if it’s zero dollars each month — will not see their loan balance grow because of unpaid interest.
Interest capitalization has hurt borrowers, but Save could provide much-needed relief.
As of April, nearly 8 million borrowers had enrolled in Save. About 4.5 million borrowers have a monthly payment of zero dollars and another 1 million have a monthly payment of less than $100, according to a White House news release.
But the program is at risk of being rolled back. Earlier this month, a federal appeals court temporarily blocked the Education Department from fully implementing the income-based repayment plan. A group of Republican attorneys general are leading the effort to roll it back, arguing that President Biden has overstepped his authority.
Opponents of debt forgiveness argue that debt forgiveness is too expensive and unfair to people who have already paid off their loans.
“It is outrageous that politically motivated lawsuits brought by Republican elected officials are once again standing in the way of lower payments for millions of borrowers,” Education Secretary Miguel Cardona said in a statement following the court’s recent ruling.
While all of this is being sorted out by the courts, borrowers who signed up with Save will be given an interest-free payment extension, Cardona said.
Let’s not forget that the Trump administration tried to eliminate the Public Service Loan Forgiveness program, which was created in 2007 to encourage work in public service jobs. After 10 years of working for a qualified employer, such as a government agency or nonprofit university, and making 120 monthly debt payments, a borrower’s remaining loan balance would be forgiven.
But the program was riddled with problems. Borrowers complain that they still haven’t gotten their loans forgiven after decades of payments. Biden pushed to fix, not cancel, a program that benefits government workers, social workers and teachers.
I vote with my money in mind. I see value in policies that guarantee decent wages, reduce poverty, fund food and housing assistance, and provide other safety net programs for those in financial need. You may have lost a job or gotten sick and no longer need help.
