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“Look! Up in the sky! It’s the national debt of the United Kingdom!”
“It’s the total GDP of Russia!”
“No, it’s America’s student loan debt!”
Don’t cry, little buddy. Joe Biden’s got your back. Probably.
I’m going to go ahead and say what we’re all thinking. America’s student loan debt is getting just a teensy bit out of hand. By the end of 2020, it reached a record-breaking $1.68 trillion. About half of that debt rests firmly on the shoulders of adults between the ages of 30 and 44[1].
That means that many Americans are still struggling to pay off their student loans as their kids apply for college. Imagine how frustrating it must be to whittle a debt balance down for nearly two decades, only to see it jump right back up to where it started. If you’re one of the many who doesn’t have to imagine, then my condolences.
Let’s take a look at what hope is on the horizon for people with student loans now that we’re entering into the era of the Biden administration.
The Story So Far
It’s tough for a crisis to get any attention around here. America has a deeply flawed healthcare system, constant conflict over gun rights, and entrenched racial issues that tend to pull focus.
The COVID-19 pandemic has gotten us to unite our efforts and focus on a single issue for once. It’s had many terrible consequences, but it’s also helped bring direct attention to the financial difficulties that America’s citizens are facing. People lost their jobs, entire industries disappeared virtually overnight, and reducing the widespread financial strain became a necessity.
A large part of that financial strain comes from student loan debt. The Trump Administration’s efforts to assist those struggling with student loans were limited. They paused interest accruals and the requirement to make payments. President Joe Biden quickly extended that forbearance out until September of 2021, but is that enough?
Fighting Out of the Blue Corner… President Joe Biden?
The vote counting controversy is (mostly) a thing of the past and President Biden is firmly in office. America has been waiting with bated breath to see how he’ll address student loan debt. Would he be the hero Gotham America deserves or the one it needs?
The issue is especially relevant today given the unequal distribution of student loan debt among America’s ethnicities. America’s black communities suffer more from both COVID-19 and excessive student loan debt. Racial tensions have once again been boiling in America lately (and for the 250 years before that, let’s be honest). President Biden has said repeatedly that he will do his best to address the issue during his presidency. Student loan debt forgiveness could go a long way toward fulfilling that promise.
The President indicated that he is in favor of providing student loan relief for the American people during his campaign. In March of 2020, he Tweeted that he’d happily support at least $10,000 of student loan forgiveness for each individual in debt.
During these past couple of months in office, other progressives have urged him to do even more. Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren proposed that he forgive as much as $50,000 per person.
Many hoped that the relief would be a part of the upcoming $1.9 trillion stimulus package. Unfortunately, that no longer seems like it’s a possibility. If push comes to shove, many believe that President Biden would simply force the issue with an executive order.
Hopes (Somewhat) Diminished
On February 17th, 2021, the President said that he would not use his executive powers to forgive $50,000 in student debt. He claimed that to do so would exceed his authority and that the responsibility for such a big move ultimately lies with Congress. However, he did reassert that he might be willing to forgive up to $10,000 of student loan debt per person via executive order at some point.
In addition to his general discomfort with ordering such a high amount of debt forgiveness, Biden also expressed that he thought it a bad idea to provide so much relief to “people who have gone to Harvard and Yale.” He seems to think that there is a better way to provide forgiveness only to people who “need” it. Time will tell how well that argument will hold up with other members of the Democratic party (they’re not happy, so far).
Will We See Forgiveness Soon? How About in the Next Stimulus Package?
The third stimulus package for COVID-19 relief is well on its way. Lawmakers should finalize the proposal sometime in March. The program will include another round of stimulus checks (this time for $1,400), though there will be some income limitations.
Unfortunately, there is no student loan forgiveness in the bill, even at the lower $10,000 threshold that President Biden supports. It may be quite some time before we see the debt relief that so many people are craving.
Even with the country’s current focus on financial matters, a lot of other issues are currently taking priority. Statistically, there are easier ways to provide financial support for people who are struggling due to COVID-19. For example, a break on mortgages and housing payments would help more people than student loan forgiveness[2].
There’s also so much pushback on the issue that it may be difficult to pass a bill anytime soon. Couple that with President Biden’s reluctance to test his executive powers, and it’s doubtful that student loan forgiveness will be coming anytime soon.
In Other News…
The controversy over forgiveness isn’t the only news in the realm of student loan debt. A lawsuit against Navient (a private student loan provider) that has been pending since the early 2000s finally settled in January.
The ruling ordered that Navient refund $22.3 million to the federal government’s Education Department, which they had previously stolen by taking advantage of governmental subsidies on private student loans. The decision will further cement the country’s trend toward direct federal student loans and away from government-subsidized debt in the private sector.
Additionally, changes to the FAFSA program are coming. FAFSA is short for Free Application for Federal Student Aid, and every parent who wants to receive federal support must fill it out.
Many have criticized the application for being excessively long. The new version will reflect that by eliminating dozens of unnecessary questions. There will also be some changes in who is eligible for support, making it easier for low-income families to get funding (though possibly harder for middle- and high-income earners).
Stay Tuned
President Biden’s latest statements about student loan debt caused quite a bit of backlash. The pressure from the rest of the Democratic party might be able to change his mind, but only time will tell. Alternatively, the general outcry from the American people could persuade Congress to provide student loan debt forgiveness in future stimulus plans (or even in a separate bill). So, if you’re hoping for some student debt relief, don’t give up hope just yet!
