Biden Extends Pause on Student Loan Payments, Considers Forgiveness

Photo credit Gage Skidmore under CC-BY-SA-2.0

“Everyone I know has taken out loans for school, and we’re all paying the price.”

This Bellevue College student, who wishes to remain anonymous, detailed their experiences with student loan debt to the Watchdog. We’ll refer to them under the pseudonym of Robin for the remainder of this story.

“I’m working on my second college degree, since I had to change careers,” explained Robin. “An injury at work left me unable to continue in my previous field. I had no choice but to take a year off for physical therapy and recovery, and that’s when the repayments began. I had to choose between paying rent or repaying these loans.”

According to the Board of Governors of the US Federal Reserve System, as of 2020, the total US student loan debt is at 1.7 trillion dollars. Student debt is even greater among Black students; according to the National Center for Education Statistics, Black students owe $25,000 more than white students on average. Four years after graduation, 48% of Black graduates owe, on average, 12.5% more than initially borrowed. 

“A few months into the pandemic, loan payments were paused,” Robin continued, “and that has been a massive help to people I know who are still stuck in repayments. I know I’m going to be stuck repaying for a long time after I finish this degree. I had to increase the amount I was borrowing, as loans are the only way I can pay for my apartment right now with COVID. It really makes me wonder what I’m going to do after the pandemic, after I graduate and the payments resume. I haven’t been able to find work, internship or otherwise, since the pandemic began. How are people like me going to adjust?”

90% of student loan borrowers took advantage of the US government’s option to pause payments. This was a part of the Cares Act, a $2.2 trillion stimulus package under the Trump administration. Initially, this lasted until September 30, 2020, then was extended an additional four months. Instead of following the Trump pattern of three-month extensions, President Biden paused student loan payments for an additional eight months until September 30, 2021, meaning no federal student payments are owed, no interest will accrue, and no student loans in default will be collected. This remains optional, however: if students desire and are able to continue paying off their loans (with no additional accrued interest), they are able.

Postponing student loan payments does little to help with the insurmountable student debt, so President Biden plans to forgive $10,000 of student loan debt for all borrowers. This would reduce the US’ total student loan debt by a third. However, to many Congressmen, this is not enough. Massachusetts Senator Elizabeth Warren proposed raising the student loan debt forgiveness to $50,000, saying that student debt forgiveness is “the single most effective economic stimulus that is available through executive action.” Senate Majority Leader Chuck Schumer seconded this; in December, he called on President Biden to forgive $50,000 in student loan debt on his first day

“I was really excited to hear Chuck Schumer and Elizabeth Warren’s proposal to cancel $50,000 in student debt,” Robin related. “That would wipe out most of my debt and make moving forward after college so much easier. I’d feel like I could sleep again.”

However, President Biden rejected this proposal. He did not want to forgive student loans for people who went to top-tier schools, such as Harvard, as they often make more than enough money upon graduation to cover the costs. Instead, Biden wanted to prioritize education in underprivileged communities. He said families who make under $125,000 and who have children who attend state universities should have free education. Additionally, he supported graduates repaying loan debt with a portion of their salary taken out of their paychecks.

President Biden’s rejection was met with criticism. New York Representative Alexandria Ocasio-Cortez tweeted, “Who cares what school someone went to? Entire generations of working class kids were encouraged to go into more debt under the guise of elitism.” Ocasio-Cortez was not alone in her outrage. Minnesota Representative Ilhan Omar said, “We also need to make college tuition-free so debt is not accumulated moving forward and invest in universal early education.” Additionally, Massachusetts Representative Ayanna Pressley tweeted that President Biden “can and must” cancel student debt

“I really agree with AOC,” said Robin. “I do not think President Biden needs to fear accidentally helping too many people who ‘don’t need it’ with student debt relief. People with wealthy families are not the ones taking out loans, whether they attend Harvard or elsewhere.”

As many House Democrats are displeased with his answer, they are still attempting to push for the $50,000. In a joint statement by Senators Schumer and Warren, they said, “The Biden administration has said it is reviewing options for cancelling up to $50,000 in student debt by executive action…to immediately deliver much-needed relief to millions of Americans.”

“At the end of the day,” finished Robin, “the cancellation of either amount, whether $10,000 or $50,000, would be absolutely life-changing for me. That said, I sincerely hope the President chooses to go bigger rather than smaller for us college students, the future of America.”