Senate Majority Leader Chuck Schumer, a Democrat from New York, speaks during a student loan debt press conference outside the U.S. Capitol in Washington on Thursday, February 4, 2021.
Al Drago | Bloomberg | Getty Images
He remains uncertain whether student loan cancellation will take place – and if so, how many borrower loans will be canceled.
On the way to the countryside, President Joe Biden has vowed to eliminate at least $ 10,000 for all borrowers, and more for those who attended public colleges or historically black colleges and universities.
However, in the middle of the Coronavirus pandemic, Biden is under mounting pressure members of his own party, lawyers and borrowers to go further by forgiving $ 50,000 per person and to do this through the action of the executive.
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Meanwhile, the senator Elizabeth warren, D-Mass., Describes student debt cancellation as “the most effective economic stimulus available through executive action. “
Over 325 organizations and non-profit organizations, including the NAACP, the American Psychological Association, and the National Consumer Law Center, also call on Biden to cancel student debt by executive action. Near 1 million people signed a Change.org petition titled “President Biden: Cancel student loans in the first 100 days.”
Many on the right claim that canceling student debt would not significantly boost the economy since college graduates tend to be higher earners who would likely shift their monthly payment towards savings rather than additional expenses. On the flip side, advocates point out that it is low-income borrowers, women and people of color who struggle the most with student loans – a pattern the pandemic has only exacerbated.
Although Biden expressed reluctance to cancel student debt by executive action In the past, White House press secretary Jen Psaki suggested this month that the administration had not ruled out the possibility.
“The president continues to support student debt cancellation to provide relief to students and families,” Psaki wrote in a Feb. 4 tweet. “Our team is examining if there are any steps he can take through executive action and would welcome the opportunity to sign a bill sent to him by Congress.”
She did not say how much of the debt the president supports canceling, but the proposals would have profoundly different impacts.
If all federal student loan borrowers got $ 10,000 off their debt, the country’s outstanding education debt would drop to about $ 1.3 trillion, from $ 1.7 trillion, according to the higher education expert Mark Kantrowitz.
And a third of federal student loan borrowers, or 14.4 million people, would have their balances reset to zero.
In contrast, canceling $ 50,000 for all borrowers would reduce the country’s outstanding student debt balance to $ 700 billion from $ 1.7 trillion.
Meanwhile, the $ 50,000 plan would write off all the debt of 80% of federal student loan borrowers, or 36 million people, Kantrowitz said.
To be sure there is a growing number of student loan borrowers who owe more than $ 100,000 and would still end up with large balances even after a $ 50,000 pardon. However, the two debt forgiveness amounts – $ 10,000 or $ 50,000 – would offset the balances of the majority of troubled and defaulted borrowers.
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