American college graduates have accumulated $1.5 trillion in student loan debt — a sum that has grown exponentially in recent decades and harmed debtors in myriad ways.
Student loan borrowers need relief. Crushing student loan debts can follow graduates for years and prevent them from fully participating in the economy. Often, they have to delay major life decisions, such as buying a home or starting a family, while paying their debts.
Federal student loan payments were suspended in March as a response to COVID-19. President Joe Biden has extended the pause on student loan payments until Sept. 30.
Biden has also committed to broad student loan forgiveness, and a Democratic majority in Congress provides him the opportunity to carry out his plan. One of his top priorities will be canceling student debt, but other plans are also in the works.
How Loan Forgiveness Would Work
At least 1 in 4 student loan borrowers are delinquent, in default, or can't afford to pay their loans. According to Student Debt Crisis, a nonprofit organization, graduates' wages have decreased by 2.5% since 2000, pushing many borrowers onto a financial tightrope. The coronavirus and economic recession have only made these hardships worse.
Source: Pew Charitable Trusts, Student Debt Crisis
Biden has floated many ideas for reducing student loan debt. One proposal is to cancel at least $10,000 in federal student loans per borrower as a form of COVID-19 relief. This plan also calls for monthly loan payments to remain suspended during the pandemic.
He also supports forgiving all federal student loan debt for borrowers who meet all three of the following conditions:
- If you attended a public college or university; historically black college and university (HBCU); or private, minority-serving institution.
- If your loans went toward undergraduate tuition at one of the schools mentioned above.
- If your annual income is under $125,000.
To help cover forgiveness costs, Biden could raise taxes on corporations and the wealthiest households (those who earn $400,000 or more per year). According to higher education expert Mark Kantrowitz, these measures would slash outstanding student loan debt by about a third.
Obstacles to Loan Forgiveness
Democrats control the House of Representatives and the Senate, due to Vice President Kamala Harris's tie-breaking vote. Even so, it's unclear if loan forgiveness legislation will pass through Congress.
Republicans will likely oppose Democratic proposals for large-scale debt forgiveness, and Biden needs every Senate Democrat to support him to overcome Republican opposition. Conservative politicians have opposed proposals for higher taxes on the wealthy, which is part of Biden's plan to pay for loan forgiveness.
2020 U.S. Senate Election Results
51 needed for majority
The easiest path to sweeping debt relief is if the Democrats use a budget reconciliation bill to pair student loan forgiveness with a tax adjustment, but Biden can also use executive authority to push student loan forgiveness.
In September, Senator Elizabeth Warren (D-MA) and Senate Minority Leader Chuck Schumer (D-NY) called on the next president to use executive power to enact broad student loan forgiveness.
"Congress, through the Higher Education Act, has already given the President and his Secretary of Education the ability to modify, compromise, waive, or release student loans," the senators wrote in a joint statement. "This authority provides a safety valve for federal student loan programs, letting the Secretary use her discretion to wipe away loans."
However, the Higher Education Act only offers limited executive authority. For example, federal statute restrictions would only make federal loans eligible for relief — not private loans.
Democrats are also pushing for more relief than Biden's $10,000 plan. Warren, Schumer, and 11 other Democrats have urged Biden to cancel up to $50,000 in student debt for each borrower through executive action.
Progressive senators, including Bernie Sanders (D-VT), Rep. Pramila Jayapal (D-Wash.), and Rep. Alexandria Ocasio-Cortez (D-N.Y.), have proposed canceling all of the $1.6 trillion in existing total student loan debt. However, in a November 2020 poll from Vox and Data for Progress, only 4 in 10 likely voters supported forgiving all student debt.
Evan Thompson is a Washington-based writer for TBS covering higher education. He has bylines in the Seattle Times, Tacoma News Tribune, Everett Herald, and others from his past life as a newspaper reporter.
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