AUSTIN, Texas — The recent Department of Education's decision to make various student loan debt cancellations is promising for graduated students. However, current and future students are not likely to see the same relief in debt obligations and should not expect the same loan forgiveness.
Jennifer Finetti, director of student advocacy from ScholarshipOwl, said current students who already have loans that they've taken out prior to July 1 will be eligible for the loan forgiveness. But they have to be under the income cap that was established. Finetti said if a student has an income under $125,000, or if their household income is under $250,000, any loans that they took out prior to July 1 of this year would be eligible for some loan forgiveness. But any new loans taken out after July 1 would not be eligible for loan forgiveness.
Experts recommend the best way to keep the amount of debt you have low is by working part-time during the school year, full-time during breaks, and taking on a side hustle if you can, like driving for Uber or doing some meal delivery services. Also, applying for lots of scholarships is an option.
"I recommend that students start applying for scholarships in their junior high school and that they continue doing that year-round all the way until they complete their college education," said Finetti.
If students need to take out a loan, it's suggested to only take on the minimum that you need to complete your education. According to Finetti, a freshman can take up to $5,500 in a federal student loan, sophomores can take out up to $6,500, junior and seniors can take out up to $7,500.
"The maximum debt that anyone should take on certainly should not exceed those federal limits. If you're finding that you would need to take out private student loans to do your education, then I recommend you look at more affordable education options, and there are plenty of affordable options," said Finetti.
Some of the affordable options include starting at a community college for the first two years where it can be either low-cost or completely free tuition, depending on the state you live in, then transferring in your final two years to go to an in-state public university.
"Or if you are really strong academically, you may be able to go to a private school and get a lot of merit scholarships from the university, as well as external private scholarships that can make private university more affordable," said Finetti.
Students who are looking for scholarships can apply to all three types of scholarships. They can apply for local scholarships in their community, apply for college scholarships from the universities they're applying to or the current university they're attending. Lastly, you can apply for private external scholarships that can be used at any number of schools across the U.S.
"Right now, we have about $800,000 in scholarships in our platform just waiting for students to apply to claim those dollars. So I highly recommend that students start applying for scholarships now if they haven't already and apply for scholarships year-round integrated into your life so that you'll have the best opportunity to reduce your reliance on loans and maybe even graduate debt-free," stated Finetti.
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