For a lot of young people, student loan forgiveness could be the first step to building generational wealth.

Applications for student loan forgiveness saw millions of borrowers apply, but after Texas’s federal judge struck down the initiative as “unconstitutional,” millions now worry about the looming end of student payment pause. Young people and low-income families now had the opportunity to apply for relief from the sometimes hundreds of thousands of dollars they had accumulated on their education since they turned eighteen. Because of student loan debt, many young Americans have never seen themselves buying property and are living paycheck to paycheck. There has been an increasing necessity to relieve financial stresses in our students and recent grads when record numbers of young people already work more than one job (in what we now call the gig economy). Tuition, also, is not your father’s tuition. The cost of education has increased 31% in the last ten years (yes, accounting for inflation) and 173% since 1980. 

Because of the pause on collecting student loan payments during the Covid-19 pandemic, students and recent grads were able to save for the first time in their lives by putting money away they otherwise would have been funneling into their loan payments. Monthly payments to loans were instead put towards other necessities such as housing or to start saving or investing. For many young people, having little to no debt is the beginning of their journey to financial freedom. 

The student loan forgiveness program would have made a dent in the debt of many Americans, offering forgiveness up to $10,000 per borrower and an additional $10,000 for Pell Grant recipients. In total, the debt forgiveness plan would have reduced student loan balances by ~ $400 billion if all who are eligible for the program applied. 

This financial relief, coupled with the last pause on student loans and the Inflation Reduction Act (IRA) being passed this fall, put more money and control of that money into the hands of our young people. The IRA, specifically, will “make small steps to help bring inflation back to normal levels,” said Shai Akabas, Director of Economic Policy at the Bipartisan Policy Center. 

Now, more than ever, is the time to take hold of your finances as a young person. Work on opening up a savings account. Learn about low-risk investing. Find a good accountant who can help with financial planning and start setting money aside for personal goals, emergency funds (for surprise medical costs or lifestyle changes – like if you lose your job), or perhaps graduate education. 

Moreover, while the student debt application is held up in court, President Biden needs to extend the student payment pause, which is due to resume after Dec 31st. Use this link to press the Biden administration to act: https://p2a.co/7dcdbs6

Nicoletta Kolpakov comes from over half a decade in policy communications and brand development, working on congressional campaigns, national think tanks, and at fast-growing tech companies. She is also a former member of the National Board for Mental Health advising Well Being Trust, Active Minds, and Young Invincibles. She is now a J.D. candidate at New York Law School.