Pressure mounts on Biden to cancel student debts
Alex Wong | Getty Images News | Getty Images
While the recent Covid stimulus package and a new massive infrastructure bill are the main talking points in Washington, President Joe Biden remains under increasing pressure to take action on student loan forgiveness.
Senator Elizabeth Warren, D-Mass., Held a hearing on the student loan debt burden Tuesday afternoon and urged Biden to cancel the loans as soon as possible.
“America is facing a student loan time bomb that, if it explodes, could throw millions of families over financial cliffs,” Warren said. “The average borrower has to start paying nearly $ 400 a month to the government instead of spending that money on the economy.”
Warren also discussed the racial inequalities in student debt, pointing out that the middle black borrower still owes 95% of the original amount they borrowed 20 years after taking out the loan. The middle white borrower only owes 6% of the original amount they borrowed two decades later.
“This is the most powerful executive action President Biden could take to promote racial justice and give everyone in America an opportunity to build a future,” said Warren.
More from Personal Finance:
Other universities are making Covid vaccines mandatory
The new career prospects for college graduates look promising
A free college could become a reality under Biden
Also on Tuesday, more than 415 organizations, including the American Civil Liberties Union, the American Psychological Association, and the Consumer Federation of America, wrote a letter to Biden and Vice President Kamala Harris urging the White House to use executive power to order “cancel the covenant” student debt immediately. “
“Before the Covid-19 public health crisis began, student debt was already weighing on the economy and weighing the worst on black and Latin American communities and women,” the organizations wrote.
“The administration’s debt relief will bring real advances in your racial justice, economic recovery, and Covid-19 relief campaign priorities.”
Top Senate Democrat New York City’s Chuck Schumer and other Democratic lawmakers have also urged the White House to take executive action to cancel student debt of $ 50,000 for all borrowers.
“You don’t need a congress,” said Schumer. “All you need is the movement of a pen.”
During the campaign, Biden said he supported student loan forgiveness of $ 10,000 but was under increasing pressure from members of his own party, lawyers and borrowers to go further by canceling $ 50,000 per person and do this through action by the executive.
White House press secretary Jen Psaki recently suggested that the government had not ruled out the possibility of debt relief without Congress. On his first day in office, Biden extended a payment hiatus for federal student loan borrowers that has been in effect from March through September next.
And Biden has asked Education Secretary Miguel Cardona to prepare a report on the president’s legal authority to cancel up to $ 50,000 in student debt per borrower. The results of this memo have yet to be published publicly.
Critics of student loan forgiveness argue that doing so would not boost the economy much, as college graduates tend to be higher-income individuals who would likely redirect their monthly payments towards savings rather than additional expenses. Others say it would be unfair to those who have already paid off their student debts or have never borrowed and would send the message that it is okay for people to drop their debts.
Proponents say that borrowers struggled well before the public health crisis – with more than one in four borrowers suffering from crime or insolvency – and that the pain has only worsened after a year of record unemployment.
The vast majority – or around 90% – of federal student loan borrowers took advantage of the government’s opportunity to suspend their monthly payments during the coronavirus pandemic, data shows. And in a recent Pew poll, 6 in 10 borrowers said it would be difficult for them to repay their student loans in the coming month.
Proponents also point out that it is people of color who are bearing the brunt of the student loan crisis, and it is also black and Latin American Americans who have suffered the most from the coronavirus pandemic. An aide to Sen. Warren said student debt relief would make the greatest strides in narrowing the racial wealth gap since the civil rights movement.
A poll found that 58% of registered voters support student loan forgiveness, and a Change.org petition calling on the president to cancel student debt has now garnered nearly 1 million signatures.
How would student loan forgiveness affect you? When you’re ready to share your story, please email me at [email protected]