Armed with new data on what they’re calling America’s "student loan time bomb," members of Congress and advocacy groups are turning up the heat on President Joe Biden to cancel as much as $50,000 in federal student loan debt for every borrower.
That would completely relieve the burden for 36 million people — 84% of all borrowers — now weighed down by college debt, according to fresh U.S. Department of Education numbers supplied to a Senate panel.
Biden has taken steps to forgive student loans for a relatively small number of borrowers, but Democrats in Congress are urging him to do more — and do it now. So are over 400 groups, in a letter to the president dated this week.
A ‘financial cliff’ for families
“America is facing a student loan time bomb that, when it explodes, could throw millions of families over a financial cliff," Massachusetts Sen. Elizabeth Warren said Tuesday while chairing a Senate subcommittee hearing on the student debt crisis.
Signing an executive order to cancel $50,000 in debt per person would be "the single most powerful" action Biden could take to give Americans a chance to build a better future, Warren said.
“Student loan debt takes a real bite out of personal finances. It can mean that borrowers can’t afford a new car, or can’t get a mortgage, or can’t launch a business, or can’t start a family," she said.
Many would-be first-time homebuyers saddled with student loans have been forced to miss out on mortgage rates that remain near historic lows.
Some 3.1 million borrowers have been carrying their student debt for over 20 years, the Education Department says in the newly released data.
Warren and other Democrats at the hearing urged the president to "act now."
Advocates push for action, opponents issue warnings
In a letter to the president on Tuesday, around 415 advocacy groups also demanded urgency, saying Biden should take executive action to cancel federal student debt immediately.
"When borrowers' student debt is canceled, their ability to pay down other debts increases; their geographic mobility and ability to stay in rural communities improves, as do their opportunities to pursue better jobs," the letter says.
Signers include the American Civil Liberties Union, the Consumer Federation of America, the American Federation of Teachers and the American Psychological Association.
Biden has said he’s willing to wipe out $10,000 in student debt per borrower, but he has indicated he's not sure he has the authority to go to $50,000. He has asked his education secretary to investigate and prepare a report.
Meanwhile, opponents of broad and generous student loan forgiveness warn of the potential for negative consequences.
Alexander Holt, policy analyst for the Committee for a Responsible Federal Budget, says schools and students would become less sensitive to tuition increases over time.
"This could create a vicious feedback loop where students borrow more, incentivizing schools to raise prices, which in turn forces students to borrow even more," Holt said while testifying at the Senate hearing.
Options for borrowers who need relief ASAP
If you’re among the millions struggling under America's $1.7 trillion in outstanding student loan debt — a figure that has risen nearly 30% since 2015 — you have options, beyond waiting for relief that may or may not come from the Biden administration.
For starters, consider refinancing your student loans. Rates on refinance loans have been hitting all-time lows, and a refi can make your student debt more manageable and help you pay it off more quickly.
Then, look at other ways to relieve a tight financial situation. For example, when your car insurance policy comes up for renewal, shop around for a better deal. If you renew without comparison shopping, you could find yourself overpaying by hundreds of dollars a year, studies have found.
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