President Joe Biden has announced that payments on federal student loans will be on pause until August 31. While this is a good move, it is time to push for all student debt to be forgiven.
With the announcement, the Biden Administration also said they will continue monitoring the economic impacts COVID-19 has had on borrowers and could allow people who have defaulted to have a fresh start, allowing them to continue payments in good standing.
Student loan borrowers currently owe a collective $1.75 trillion in student loans, according to the Education Data Initiative’s latest data posted this month. And 15% of borrowers under 40 are behind on their payments.
The problem of student loan debt goes on for decades for many borrowers, with 69.6% of borrowers between the ages of 25 and 50, according to the Initiative, with 35-year-olds holding the highest loan debt of about $42,600 per borrower.
Black students are also most likely to use federal student loans, with 49.4% borrowing. Black graduates are also 30% more likely to default on payments within 12 years of payment, according to the Education Data Initiative.
With inflation increasing the costs of living, and rising tuition costs, canceling student loan debt could help young and middle-aged borrowers get a handle on their economic situation and be better positioned to contribute to the U.S. economy.
Canceling student loan debt could add $109 billion to the annual GDP over six years and lift 5.2 million people out of poverty, according to the Education Data Initiative.
Currently people can enroll in income-driven repayment programs, allowing people with federal student loans to help with the monthly costs of repayment based on income and family size. Most federal loans are eligible for one of the four plans available. While this program can help keep borrowers out of default or bankruptcy, it’s not enough.
During his campaign, Biden said he would push for at least $10,000 of loan forgiveness per borrower. It’s time he made good on that pledge.
Rising tuition and the impact student loan debt has on borrowers cannot be ignored any longer. It is time for widespread student loan forgiveness.
To learn more about the plans and eligibility, visit studentaid.gov/manage-loans/repayment/plans/income-driven.