Administration signals student loan forgiveness decision may be coming soon

President Joe Biden delivers remarks on the jobs report for the month of March from the State Dining Room of the White House on April 1, 2022 in Washington, DC.

Anna Moneymaker | Getty Images News | Getty Images

The tens of millions of Americans struggling with student loans may finally hear soon what, if anything, the Biden administration has decided to do on debt forgiveness.

“Not a single person in this country has paid a dime on federal student loans since the president took office,” White House press secretary Jen Psaki said during Monday’s press briefing. .

She went on to say that President Joe Biden “would make a decision on any student debt forgiveness before this pause on student loans ends.”

This pandemic-era relief suspending bills has been in effect for more than two years, and is currently scheduled to expire on August 31.

Learn more about personal finance:
More Americans feeling strapped for money as inflation climbs
What to do if you missed the April 18 tax filing deadline
Here’s how to get the most money for college

Even before the health crisis, repayment problems were common among student borrowers.

The country’s outstanding education debt has exceeded $1.7 trillion and has placed a heavier burden on households than credit card or auto debt. It is estimated that around a quarter of student borrowers – or 10 million people – are in default.

The financial fallout from the public health crisis has only made matters worse, experts say. A recent study found that student borrowers surveyed reported a 16% chance of quickly missing a payment if the payment break ended.

Although Biden has expressed skepticism about canceling student loans in the past, another development this week suggests he may be warming to the idea.

When the topic was raised Monday with the Congressional Hispanic Caucus, the president indicated that he was currently seeking to propose some form of student debt forgiveness, according to multiple reports.

Democrats and advocates have exerted intense pressure on the president to act before midterms, pointing out that canceling student debt is a campaign promise he can keep without Congress, as much of his agenda stalled in the House and Senate.

Whether the president has the power to cancel the debt through executive action is still a matter of debate among some lawyers.

Meanwhile, opponents of student loan forgiveness say the policy forces taxpayers to foot the bill for those who have benefited from higher education and is unfair to Americans who did not attend college, have never borrowed or repaid their debt.

Proponents point out that the rising cost of a college education has left people with no choice but to borrow if they want to get a good-paying job, and that people of color and women are suffering the most from the loan system. Two-thirds of federal student debt is held by women.

According to a recent study by the Federal Reserve Bank of New York, approximately 70% of the relief from a notional $50,000 student debt forgiveness would go to people living in middle- and low-income neighborhoods.

Do you have student debt? How does it feel to wait for a decision on pardon? If you are willing to share your experience for a story, please email me at [email protected].

Comments are closed.