Why President Biden’s Scholar Mortgage Forgiveness Might Be Delayed
Nate Wlodarchak, left, and his husband Shawn Wlodarchak.
Source: Nate Wlodarchak
When Nate Wlodarchak drove people to the polls on election day, he couldn’t stop imagining his life without student debt. During the campaign, President Joe Biden had promised to grant all borrowers $ 10,000 of the loan, which would bring Wlodarchak’s balance to practically zero.
Without the loans that weigh on him, 37-year-old Wlodarchak, a scientist studying tuberculosis, could put more of his paychecks into his savings every month. And he and his husband Shawn, who live outside of Denver, could finally give serious thought to the many goals, like having children, that they had to leave behind.
Now, Wlodarchak and tens of millions of other borrowers burdened with student loans await the new president to ease some of their debt burden. “We took his promise to heart to make it a key priority,” said Wlodarchak.
However, given the dual and historic economic and health crisis in Biden, student loan origination may not be as quick as some had hoped. Vaccinating people against Covid, reopening schools, and providing financial aid to unemployed and food insecure Americans will likely be a priority.
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In addition, there is a heated and unresolved debate over whether debt relief should be done through laws passed by Congress or through executive action by the President.
Proponents say student debt relief is a crucial part of any meaningful response to the coronavirus pandemic, and point out that borrowers had problems even before the crisis. Even almost a year ago of record job losses, and when the country was in the midst of its longest economic expansion in history, more than one in four student loan borrowers was in default or insolvency.
Others point out that it is people of color who are bearing the brunt of the student loan crisis, and it is also black and Latin American Americans who have suffered the most from the coronavirus pandemic. An adviser to Senator Elizabeth Warren, D-Mass., Said reducing student debt would make the greatest strides in closing the racial wealth gap since the civil rights movement.
“Debt relief would have a tremendous impact on those hardest hit by the coronavirus pandemic: Black Americans, senior borrowers and graduates,” said Alexis Goldstein, senior policy analyst at Americans for Financial Reform.
On his first day in office, President Biden signed an executive order extending the break in monthly payments for federal student loan borrowers through September 2021.
Mike Calhoun, president of the Center for Responsible Lending, described the action as “a critical first step,” but hopes that “the administration will consider a blanket resignation that can provide families with a path to justice and financial advancement.”
At a press conference in late November, a reporter asked then-elected President Biden where he stood on student loan debt forgiveness.
“You are in real trouble,” said Biden of Borrowers. “You have to make a choice between paying your student loan or paying your rent. These types of decisions should be made immediately.”
However, the president’s portrayal of a $ 1.9 trillion stimulus package released earlier this month makes no mention of student debt cancellation. Senior officials in the Biden administration claim the president still supports $ 10,000 forgiveness per borrower.
“It’s hard to know how to read the tea leaves,” said Rick Hess, director of educational studies at the American Enterprise Institute.
Legislation is unlikely to be proposed until late summer or early fall.
Higher education expert Mark Kantrowitz said Biden’s Covid relief plan focuses on the most pressing issues of the public health crisis and debt relief is likely to come later.
“I think the chances that a student loan will be granted are better than ever,” said Kantrowitz. “But the legislation is unlikely to be proposed until late summer or early fall.”
Adopting this legislation could prove difficult.
Even with the Democratic Senate victories in Georgia, they have achieved the smallest majority and only have 50 members among the 50 Republicans, with Vice President Kamala Harris having a groundbreaking vote if necessary. Many on the right argue that a college student debt jubilee wouldn’t give the economy a major boost, as college graduates tend to be higher-income individuals who would likely redirect their monthly bills towards savings rather than additional expenses.
Proponents and other Democrats argue that the legislative path is too time-consuming and risky, and urge Biden to use executive action to reduce the debt sooner.
Top Senate Democrat Chuck Schumer, DN.Y., urges Biden to immediately lend $ 50,000 per borrower. “All you need is the movement of a pen,” Schumer said last month. “You don’t need a congress.”
And Warren described student debt relief as “the most effective economic incentive available through executive action.”
In response, Biden said it was “unlikely” that he would cancel student debt of $ 50,000 for all borrowers alone, although an aide for Warren said they would continue to advocate presidential debt relief with the new administration.
For the time being, Wlodarchak remains confident that his student loans will be granted at some point. He has his plan, if and when it is them: He’s going to take his husband to a fancy surf-and-turf dinner.
And he even knows what he’s going to order. “A porterhouse with morels and a lobster with cold water, of course red wine,” he said. “Oh, and Bananas Foster for dessert!”