Biden’s plans for student loan relief – Quartz
If you are among the 42 million Americans with federal student loan debt, here’s the good news: President Joe Biden has prolonged abstention on payments until the end of September. This continues the relief from Covid-19 first enacted by former Education Secretary Betsy DeVos, then passed by Congress in March of last year, intended to ease the financial burden on Americans during the economic crisis.
But the Americans $ 1.7 trillion in student loan debt is a factor of inequality and a brake on the economy, even in relatively stable times.
Research suggests that student loan debt exacerbates the racial wealth gap (pdf): A 2019 to study (pdf) found that 20 years after starting school, the median black borrower still owed $ 18,500 in federal student debt, while the median white borrower owed only $ 1,000.
Student loan debt has also been linked to falling homeownership rates, less consumer spending, and less new small businesses (it is difficult to bet on entrepreneurship when you are still paying for your studies).
So what are the odds that Biden will make more headway on student loan relief? Here’s what we know so far about his plans.
What Biden definitely does:
On his first day in office on Wednesday, Biden called on the education department to continue the suspension of interest and payments on federal student loans until at least October 1. The government will also continue to pause on collections of defaulted federal student loans.
Brian Deese, the new director of Biden’s National Economic Council, told reporters that borrowers shouldn’t have to choose between paying for groceries and paying off debt: “At this time of tough economic times, we want to reduce the burden of these financial exchanges. offs.
It is certainly true that loan repayments can drastically reduce the income of borrowers. The average monthly payment for borrowers is $ 393 and the median monthly payment is $ 222, according to a 2017 report from the Federal Reserve. A 2019 TD Bank report found that U.S. borrowers on average 20% of their net monthly salary owed student loan debt.
What Biden can do:
On the campaign trail, Biden supported the $ 10,000 per capita federal student loan debt forgiveness, and Deese confirmed to reporters that Biden still wants this to be done through congressional legislation.
Nearly 60% of Americans support the $ 10,000 pardon proposal, according to one recent poll by Matin Consult.
by Biden higher education proposals, released during his campaign, also included an income-based repayment plan that would be made available to existing borrowers as well as new ones. Under it, Americans earning more than $ 25,000 a year would spend 5% of their income on loans that would be canceled (tax exempt) after 20 years. People who earn less than $ 25,000 a year would benefit from interest-free forbearance on their loans.
Additionally, Biden’s plan called for him to introduce legislation to provide two years of tuition-free community college to all Americans (an idea first proposed in 2015 by Biden and then-President Barack Obama) and to make public colleges and universities free for families. with incomes of less than $ 125,000.
What congressional Democrats want Biden to do
Some of Biden’s former colleagues in the Senate will push him to pass more sweeping student debt relief. Democratic Senators Elizabeth Warren and Chuck Schumer introduced a resolution in September last year calling on the new president to cancel up to $ 50,000 of federal student debt per person. The resolution says that under the Higher Education Act, the president has the power to order the secretary of education to write off student debt. House Democrats led by Ayanna Pressley, Maxine Waters and Ilhan Omar presented a resolution in December.
But some jurists I’m not sure an executive order would stand in court, and Biden himself said in december that he thinks his authority in the matter is questionable. That would leave it up to Congress to push through a bigger loan forgiveness, but with a divided Senate and Democrats tightly controlling the House, the support might not be enough.