$ 10,000? $ 50,000? What totally different quantities of pupil mortgage forgiveness would imply for debtors
Senate Majority Leader Chuck Schumer, a Democrat from New York, speaks about student loan debt during a press conference outside the U.S. Capitol in Washington on Thursday, February 4, 2021.
Al Drago | Bloomberg | Getty Images
It remains uncertain whether there will be student loan forgiveness – and if so, how many borrower loans will be canceled.
In the campaign, President Joe Biden pledged to wipe out at least $ 10,000 for all borrowers and more for those attending public colleges or historically black colleges and universities.
However, amid the coronavirus pandemic, Biden is under increasing pressure from members of his own party, lawyers and borrowers to go further by giving away $ 50,000 per person and doing so through action by the executive branch.
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"All you need is a touch of your finger," Senate top Democrat Senator Chuck Schumer of New York recently said about student debt relief. "You don't need a congress."
Meanwhile, Senator Elizabeth Warren, D-Mass., Describes student debt relief as "the most effective economic stimulus that can be achieved by executive action."
More than 325 organizations and nonprofits, including the NAACP, the American Psychological Association, and the National Consumer Law Center, are also calling on Biden to cancel student debts through executive action. Nearly 1 million people have signed a Change.org petition titled "President Biden: Cancel Student Loans In The First 100 Days".
Many on the right argue that student debt relief would not boost the economy much, as college graduates tend to be higher-income individuals who would likely redirect their monthly payment towards savings rather than additional expenses. On the flip side, proponents point out that it is low-income borrowers, women, and people of color who are struggling the most with student loans – a pattern that the pandemic has only exacerbated.
Although Biden has been reluctant to use executive action to reduce student debts in the past, White House press secretary Jen Psaki suggested earlier this month that the government had not ruled out the possibility.
"The president continues to support deleveraging to ease the burden on students and families," Psaki wrote in a February 4 tweet. "Our team is currently assessing whether he can take action through executive action and he would appreciate the opportunity to sign a bill sent to him by Congress."
It didn't say how much of the debt the president canceled, but the proposals would have profound implications.
$ 10,000 or $ 50,000
If all federal loan borrowers were to cancel their debt at $ 10,000, the country's outstanding educational debt would fall from $ 1.7 trillion to around $ 1.3 trillion, according to Mark Kantrowitz, an expert in higher education.
And a third of federal student loan borrowers, or 14.4 million people, would see their balances reset to zero.
The cancellation of $ 50,000 for all borrowers, on the other hand, would reduce the country's outstanding debt level on student loans from $ 1.7 trillion to $ 700 billion.
Meanwhile, the $ 50,000 plan would cancel 80% of federal student loan borrowers, or 36 million people, all of their debt, Kantrowitz said.
Of course, there are a growing number of student loan borrowers who owe more than $ 100,000 and would still have large balances after $ 50,000 in forgiveness. However, either amount of debt relief – $ 10,000 or $ 50,000 – would offset the balances for the majority of borrowers who are struggling the most and are in default.
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