Progressive lawmakers took to the floor of the House of Representatives on Thursday to demand President Joe Biden cancel student loan debt, which has ballooned to more than $1.8 trillion held among 45 million Americans.
Payments on federal student loans have been paused with interest rates set to zero per cent with passage of coronavirus relief legislation in March 2020. That pause was repeatedly extended, but it will come to an end in January 2022, following nearly two years of dramatic financial relief for millions of Americans during the public health crisis and its economic fallout.
Most of that outstanding debt is in federally backed loans.
Advocates have pushed Congress and the Biden administration to unilaterally cancel all federally held debts, and progressive lawmakers are mounting a last-ditch attempt to halt loan repayments as the pandemic enters a third year.
“This is getting ridiculous,” said US Rep Alexandria Ocasio-Cortez, who is among members of Congress still paying off outstanding debts from college. Her loan balance is $17,000, she said. She did not go to graduate school because “getting another degree would drown me in debt I would never be able to surpass,” she said.
The congresswoman, 32, is the first in her family to graduate from college on her mother’s side.
“Growing up I was told since I was a child, ‘Your destiny is to go to college. That’s what’s gonna lift our family up and out. That is our future,’” she said.
“We still do that today,” she added. “It’s teenagers signing up for what is often hundreds of thousands of dollars of debt, and we just do that. And our government allows that. We give 17-year-olds the ability to sign on for hundreds of thousands of dollars of debt, and we think that’s responsible policy.”
Student debt has surged within the last decade as private university enrollment grew and federal and state governments made steep cuts to higher education funding against growing wealth inequality. Within the next four years, if unchecked, outstanding student debt is expected to hit $2 trillion. That doesn’t include money borrowed by students’ parents.
Over the last several decades, federal and state governments have stripped funding for higher education, while tuition costs have spiked, federal policy changes effectively eliminated limits on borrowing, and predatory lending schemes and sky-high interest rates have trapped a generation of borrowers into a lifetime of debt.
That compounded interest is a growing problem; with interest rates set at zero per cent during the current pause, borrowers have had temporary relief to begin paying off their principal balance. That is set to end next year.
In his remarks on Thursday night, US Rep Jamaal Bowman said student debt was a national crisis before the pandemic and “an even bigger one now”.
“For years, people have been doing all they can to make monthly payments, but can only afford to keep up with the interest that accrues,” said Rep Bowman, pointing to the thousands of Americans who have paid “hundreds of dollars every month for years without seeing the total amount they owed go down at all.”
A recent survey of more than 33,000 borrowers from the Student Debt Crisis Center found that 89 per cent of respondents are not financially secure to resume payments in February. One in five respondents said they will never be financially secure enough to start paying again.
Respondents said their student loan payments “will eat a large portion of their income and prevent them from affording other bills like rent, car loans and medicine,” according to the report. “These findings are doubly concerning within the context of the nation’s rising inflation and cost of living.”
The weight of all that debt can have severe long-term consequences among borrowers who default, from damaged credit to the risk of having their professional licenses or driver’s licenses suspended, depending on the state and type of loan involved.
“We are a country profiting off insurmountable and crushing student debt,” Rep Ocasio-Cortez said. “It is wrong. It is absolutely wrong.”
The pause on loan payments and interest has “given people the breathing room to do what they need to do,” she said.
“And so that we can stop writing these ridiculous articles that young people are killing diamond rings and they’re not buying houses and they’re killing this industry and that and not having children,” she said. “It’s because we’re being crushed by immoral debt. No person should have go into into debt, crushing debt, in order to get an education. … It’s wrong, it’s backwards, and it doesn’t help us as a country.”
The administration has canceled cancelled more than $9bn in student loan debt through targeted aid programmes for people defrauded by schools, or through the Total and Permanent Disability discharge programme, which grants relief to borrowers who are unable to work due to physical or psychological disabilities.
During his campaign, Mr Biden proposed a debt relief plan that would cancel up to $10,000 of undergraduate or graduate student loan debt for every year of national or community service, up to five years.
He also modelled a plan from Senator Bernie Sanders and US Rep Pramila Jayapal to cancel federal student loan debt for borrowers from public colleges and universities earning up to $125,000 per year, including students from private Historically Black Colleges and Universities, in an effort to close the racial wealth gap.
Those proposals were not included in his centerpiece domestic legislation packages.
The US Department of Education is mulling whether the president has authority to cancel student loan debt through executive action.
Progressive lawmakers have also proposed a resolution calling on the president to “take executive action to broadly cancel federal student loan debt” and introduced the Student Loan Forgiveness for Frontline Health Workers Act and Student Debt Emergency Relief Act.
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