New Congress could help alleviate student debt, says personal finance CEO

Personal finance CEO Zack Friedman says a Democratic-controlled House and Republican-controlled Senate could create the right environment for better student debt assistance.

Friedman told “Rising” he thinks there’s potential for House Democrats to reauthorize The Higher Education Act (HEA) when they take back the House in January.

The sweeping law was first passed under the Lyndon B. Johnson administration in 1965, and Congress has yet to move forward on a ninth reauthorization. The Act covers a range of education issues, including financial assistance for students. 

“It has been a big issue of debate House Republicans tried to put forth a plan also working with the Senate but it just hasn’t faced that reauthorization, so I think Democrats may step up and try to do that in the House for the next Congress, but it is kind of a key act that will govern the future of education in student loans,” Friedman told Hill.TV co-hosts Krystal Ball and Buck Sexton during an interview that aired on Tuesday.

Friedman is the founder and CEO of Make Lemonade, an online personal finance company.

He warned the cost of higher education has risen “astronomically,” saying it can be difficult to pay for a four-year degree, even with a variety of government relief options like financial aide or scholarships.

There’s also other government assistance options like the Public Service Loan Forgiveness Program (PSLF), which was started under the Bush Administration in 2007.

Under this relief program, public servants can have their student loans forgiven. But so far, almost 96 applications out of nearly 30,000 who applied for the program have been approved this year. 

“I think it’s important for folks when they go to college, or law school or business school to take a look at the cost of their education and what they expect to earn afterwards…because the amount of debt that one has to borrow and then start out their lives just trying to live it or trying to buy a home and make other financial decisions – it makes it incredibly difficult,” the CEO told Hill.TV.

Education related debt has crippled many Americans — second only to home mortgage debt.

According to a new report by Make Lemonade, forty-four million borrowers collectively owe $1.5 trillion and 40 percent of borrowers are expect to fall behind on their payments by 2023.

– Tess Bonn