$50K student loan forgiveness would cancel debt of 84% of borrowers, Biden told
The $ 50,000 student loan award would cancel the debt of 84% of borrowers, Biden said
With new data on what they call America's "student loan time bomb," members of Congress and advocacy groups are heating President Joe Biden to cancel up to $ 50,000 in student loan debt for each borrower.
This would completely relieve the burden for 36 million people - 84% of all borrowers - now burdened with college debt, according to new US Department of Education figures presented to a Senate committee.
Biden has taken steps to provide student loans to a relatively small number of borrowers, but the Democrats in Congress are telling him to do more - and now. So are over 400 groups in a letter to the President dated this week.
A “financial cliff” for families
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"America is facing a student loan time bomb that, if it explodes, could throw millions of families over financial cliffs," Massachusetts Senator Elizabeth Warren said Tuesday as she chaired a Senate subcommittee hearing on the debt crisis Students led.
Signing an ordinance to pay off debt of $ 50,000 per person would be "the most powerful" move Biden could take to give Americans the chance to build a better future, Warren said.
“Student loan debt takes a real bite out of personal finances. It can mean borrowers cannot afford a new car or take out a mortgage or start a business or have a family, "she said.
Many potential first-time buyers burdened with student loans have missed out on mortgage rates that remain near historic lows.
Around 3.1 million borrowers have been carrying their student debt for over 20 years, according to the education department in the newly released data.
Warren and other Democrats at the hearing called on the President to "act now".
Supporters urge action, opponents issue warnings
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In a letter to the president on Tuesday, around 415 interest groups also called for urgency, saying Biden should take executive action to immediately cancel federal student debts.
"When borrowers' student debt is canceled, their ability to pay off other debts increases. Their geographic mobility and ability to stay in rural communities improve, as does their opportunities to find better jobs," the letter said.
The signatories are the American Civil Liberties Union, the Consumer Federation of America, the American Federation of Teachers, and the American Psychological Association.
Biden has stated that he is ready to eliminate student debt of $ 10,000 per borrower, but has indicated that he is not sure he has authority to go on $ 50,000. He asked his education secretary to examine and prepare a report.
Meanwhile, opponents of broad and generous student loan forgiveness warn of possible negative consequences.
Alexander Holt, political scientist on the Federal Responsible Budget Committee, says schools and students would become less sensitive to tuition increases over time.
"This could create a vicious feedback loop where students borrow more and encourage schools to raise prices, forcing students to borrow even more," Holt said while speaking at the Senate hearing testified.
Options for borrowers who need help ASAP
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If you're one of the millions struggling under America's $ 1.7 trillion in outstanding student loan debt - a number that has increased nearly 30% since 2015 - you have options beyond waiting for relief that may or may not come from the Biden government.
First, consider refinancing your student loan. Refinance loan interest rates have hit all-time lows, and a refi can make your student debt more manageable and help you pay it off faster.
Then look at other ways to relieve a strained financial situation. For example, if your car insurance needs to be renewed, look for a better deal. If you renew with no comparative purchases, you could find yourself overpaying hundreds of dollars a year, studies have shown.
Or, earn some returns on the record breaking stock market in a way that means minimal effort on your part. Create a portfolio with a popular app that you can use to invest your "change" from everyday purchases.
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