Last month, President Joe Biden announced that the student debt moratorium would be extended until Aug. 31, marking the seventh postponement since his predecessor initially enacted the freeze in March 2020.
As the issue has resurfaced, high-ranking Democrats have urged Biden to forgive student loan debt, and recent reports indicate the President may soon fulfill his campaign promise to cancel student loan debt; however, the exact amount he will cancel is still unknown. Though he promised to cancel a minimum of $10,000 per borrower back in 2020, some are pushing for $50,000, while others urge cancelling all $1.75 trillion of student debt in the US.
“I am not considering a $50,000 debt reduction,” President Biden said during last week’s briefing when asked about student loan forgiveness. “But I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness, and I’ll have an answer on that in the next couple of weeks.”
Though Biden never promised to forgive $50,000 for each borrower, that specific amount has been part of the discussion thanks to a February 2021 press release from Senator Elizabeth Warren (D-Mass), Senate Majority Leader Chuck Schumer (D-N.Y.), and Congresswoman Ayanna Pressly (D-Mass).
The press release outlined a plan for Biden to “tackle the student loan debt crisis by using existing authority under the Higher Education Act to cancel up to $50,000 in student loan debt for Federal student loan borrowers.”
After detailing the pandemic’s impact on the economy and society, the press release states, “By canceling up to $50,000 in federal student loan debt for borrowers, President Biden can take the single most effective executive action available to provide a massive stimulus to our economy, help narrow the racial wealth gap, and lift this impossible burden off of tens of millions of families.”
The Biden administration has already canceled $7 billion worth of student loans for qualified borrowers—specifically, borrowers who were receiving Social Security Disability benefits and qualified for the Total and Permanent Disability (TPD) discharge program.
However, according to educationdata.org, the collective amount of student loan debt in the US is $1.75 trillion as of Apr. 10, 2022, of which Biden’s $7 billion only covers about 0.4%. Additionally, the $7 billion affected only 350,000 of the 43 million Americans with student loan debt, giving relief to roughly 0.8% of total borrowers.
Aside from extending the moratorium and forgiving debt for qualified borrowers, Biden also modified student loan forgiveness programs last year. For example, he loosened the unreasonably strict and often confusing requirements of the Public Service Loan Forgiveness (PSLF) program, making it easier for borrowers to qualify.
Furthermore, the most recent extension on the student loan freeze comes with a new benefit: a “fresh start” for borrowers who were in default before the pandemic when payments resume. According to the US Department of Education, this will eliminate “the impact of delinquency and default” and permit borrowers “to reenter repayment in good standing.”
Senior Industry analyst at Bankrate Ted Rossman told Fortune last month that expunging the status could boost a borrower’s credit score by as much as 100 points, saying, “It could be really significant, especially for someone whose only blemish is a missing student loan payment.”
Biden appears ready to fulfill promises from 2020
Like a classic game of Telephone, there is confusion among social media users as to what Biden actually promised regarding student debt during his campaign, with some claiming he intended to clear all $1.75 trillion of it.
The most explicit promise Biden made was to forgive “a minimum of $10,000/person of federal student loans,” per his tweet from March 2020. However, he is also on record having said publicly, “I’m going to eliminate your student debt if you come from a family [making less] than $125,000 and went to a public university.” Biden gave this particular quote during a town hall in Miami, Florida, in October 2020.
Despite never pledging to cancel every penny for everyone with student loan debt, Biden has yet to fulfill either of his aforementioned promises. But with the issue resurfacing thanks to this recent extension and pressure from the media and high-ranking Democrats, Biden appears ready to finally realize what he’s pledged.
According to a recent report by the Washington Post, “President Biden gave his strongest indication yet in a private meeting with House Democrats that he is poised to take significant action to relieve student loans.”
These indications were given during a meeting with members of the Congressional Hispanic Caucus last Monday. Rep. Tony Cárdenas (D-Calif.), who was in attendance, told the Post that he not only urged the president to extend the moratorium beyond August 2022 but to sign an executive order to forgive at least $10,000 in student loan debt per borrower.
Cárdenas shared with the Post how he explained to Biden that “Latinos in the United States who are carrying student debt still have more than 80 percent of their bill due after more than a dozen years.” Multiple Congressmen in attendance told the Post that Biden responded positively to these exhortations.
The student loan debt debate continues
As student loan debt has become a prominent issue in recent years, the debates surrounding it have been ramping up. For young people, the topic is especially relevant. A Harvard Youth Poll from last month found that 38% of 18-29-year-olds in the US favor total debt cancelation. The poll further revealed that “27% favor government assisting with repayment options without any debt cancellation, and 21% favor debt cancellation for those with the most need,” and that only 13% believe the government shouldn’t make any changes to its current policy.
In the political realm, it seems that most proponents of debt relief are Democrats. For example, in their joint press release, Warren, Pressly, and Schumer stated, “Studies show that cancelling student debt would substantially increase Black and Latinx household wealth and help narrow the racial wealth gap, provide immediate relief to millions of Americans during the pandemic and recession, and provide massive consumer-driven stimulus to our economy.”
At the beginning of last month, Sen. Bernie Sanders (D-VT) simply stated in a tweet, “Cancel student debt. All of it.” Sanders later backed up his proposal with a “CANCEL STUDENT DEBT” live stream on YouTube, where he expounded on the widespread impacts of student debt on Americans for nearly an hour.
On the other side of the argument, Republican officials are not too keen on the idea. In February of last year, Sen. John Thune (R-SD) said on the Senate floor that forgiving student loans, even up to $50,000, would be “incredibly, fundamentally unfair.”
“Right now, there are individuals around this country who have just paid off the last of their student loans,” Thune said. “They’ve been working hard and making payments – sometimes for a couple of years, sometimes for a couple of decades. What happens to these individuals if the president steps in and forgives $50,000 of student debt? I’ll tell you. Nothing.”
“These individuals, who have worked hard for years to pay off their debt, will see no benefit from Democrats’ blanket loan forgiveness,” Thune continued. “Meanwhile, other Americans, who have made no more than a month or two of payments, will see their student loan debt disappear. That is incredibly unfair.”
For Sen. Ted Cruz (R-TX), the idea of student loan cancelation negates the responsibilities of the individuals who choose to pursue higher education. Last year, the Senator tweeted, “students have INDIVIDUAL RESPONSIBILITY for choices too.”