Hope is finally within reach for student borrowers
With student debt now approaching $2 trillion, the Biden administration is looking to write off perhaps $10,000 of many people’s bonds. If so, it’s a move long sought by progressives and opposed by some conservatives.
Would this be enough to solve the problem or are more drastic measures needed? That remains to be seen.
Emily Kralick graduated from Cal Poly Pomona with approximately $13,000 in student loan debt. Six years later, it still weighs on her.
“No matter how I slice it, like if I have a good month at work, if I’m super thrifty, I always carry that $13,000 that doesn’t seem to budge,” she said. “I feel like I can’t make a dent in that.”
President Biden recently extended a student loan repayment moratorium until September. The average student loan debt now exceeds $30,000.
Total US student debt has fallen from around $980 billion in 2011 to $1.7 trillion last year. That’s about double what Americans owe for credit cards.
And the problem extends far beyond young people.
“In reality, the fastest growing number of student borrowers are those aged 55 or older,” said Whitney Barkley-Denney, senior policy adviser for the Center for Responsible Lending at Purpose. non-profit.
She is no stranger to these issues. Barkley-Denney has more than $100,000 in debt related to her law degree.
Last month, the Biden administration provided debt relief for millions of student borrowers. They expected help from the Department of Education which never arrived due to past mismanagement.
But what now?
“We know that borrowers face many challenges,” responded Kelly Leon, press secretary for the US Department of Education.
“We are taking action now, trying to help borrowers manage these repayments and fix programs that can help them get debt relief faster.”
Some progressives, including Vermont Senator Bernie Sanders, are calling for the cancellation of all or part of the student debt.
They say it would provide an adrenaline rush to the economy. Critics say such a move would unfairly benefit the most privileged members of society.
Leon said the Biden administration is open to all possibilities.
“We continue to explore our options and what we can do in regards to large-scale cancellation,” she said.
A wild card: how to deal with the disproportionate impact of student debt on people of color.
“Because black families have less wealth to rely on, we find that black families take on a lot more debt to go to school, take longer to pay it back, and have a harder time paying it back,” says Barkley Denney.
This may lead to a higher proportion of black borrowers in default or delinquency.
Some experts believe the Higher Education Act of 1965 empowers the president to order the Department of Education to cancel government-controlled student loans. That is, an act of Congress may not be necessary.
I asked Leon the question. She declined to comment.
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