New reports on the payment pause for federal student loan borrowers and potential debt forgiveness made headlines this week.
President Joe Biden is unlikely to announce a decision on student loan forgiveness before the end of the summer, The Wall Street Journal reported In Monday. Meanwhile, during a hearing with lawmakers On Tuesday, Education Secretary Miguel Cardona said the payment break, which is due to expire in September, “could be extended”. He notes that “borrowers will have sufficient notice”.
As of March 2020, borrowers have the option to waive their monthly payments without accruing interest on their federal student loan debt. The pandemic-era relief policy is set to expire on August 31, but if that date is further delayed, it would be the seventh extension.
More than 43 million borrowers with federal student debt of approximately $1.6 trillion were waiting for an update after Biden said in may he would share his plans in the coming weeks.
“Borrowers have been waiting two and a half years” for a decision on whether to cancel their loan, says Natalia Abrams, founder and executive director of Student Debt Crisis, an advocacy group that has since focused on student debt reform and lending policies for higher education. 2012. “Their financial lives have been put on hold and they need to find out as soon as possible,” she says.
Biden leans for $10,000 discount per borrower
As for debt cancellation, at the end of May, the Biden administration was leaning towards the cancellation of $10,000 in student loans per borrower, The Washington Post reported. According The Wall Street Journal.
Student Debt Crisis and other advocacy groups are pushing for a rebate of $50,000 or more with no income qualifying threshold. “There are myriad reasons to avoid an income threshold,” says Cody Hounanianexecutive director of the Student Debt Crisis Center.
“We know from research and our experience with the current student loan program that these income thresholds are a recipe for preventing borrowers who need the most help, especially borrowers of color, from get the relief they need,” Hounanian said.
This is because student borrowers of color are more likely to go into debt and struggle to repay for a variety of reasons, according to a May 27 letter written by many groups including civil rights, education, climate, health, consumer, labor, professional, food and agriculture, and student advocacy organizations including the Student Debt Crisis Center. “The disproportionate impact of student debt on borrowers of color exacerbates existing systemic inequalities and widens the racial wealth gap,” the letter states.
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