During the pandemic the Education Department has placed a pause on student loan repayments, giving graduates a bit of breathing room amid the economic turmoil of the last two years. The loan repayment relief has been extended five times already but is now due to end in May.
This has brought the issue of student loan debt back to the forefront and some lawmakers are pushing for change. Outstanding student loan debt in the US now exceeds $1.7 trillion and around 10 million people are considered likely to enter delinquency or default on that debt.
In 2021 the average student loan debt per borrower is $39,351, which means an average monthly payment of $393, according to recent statistics from EducationData.org.
In total 43.2 million people currently have a student loan and that number is only increasing each year. Worryingly, around 2.6 million graduates owe more than $100,000 in student loan debt alone.
Lawmakers pile pressure on Biden to cancel student debt
The huge scale of the United States’ student debt crisis has been exacerbated by the covid-19 pandemic, which has destroyed millions of American’s livelihoods and created financial instability. Government has introduced many measures in the past two years aimed at helping Americans stay afloat and there is a growing push for a considerable amount of student loan debt to be wiped out.
A group of more than 80 lawmakers from both the House and the Senate have signed a letter to President Biden, asking him to show some progress on the student loan cancellation. Last year Biden had requested the Education Department to prepare a report on his legal authority as president to unilaterally cancel student loan debt.
The letter included the signatures of Senate Majority Leader Chuck Schumer and Sen. Elizabeth Warren and it called on Biden to write off $50,000 of student debt per borrower. This would see around 36 million people, 80% of the total number with a student loan debt, have their debt completely cleared.
However the move would cost around $1 trillion and Biden has not yet established whether he has the legal power to do so. But while a huge universal write-off of student debt could be difficult to achieve, Biden has been making gradual progress with more targeted student loan cancellations.
During his first year in the White House he utilised various mechanisms to write off student loans for more than 675,000 borrowers and cancelling $15 billion of debt. A total of $7 billion was written off for those with disabilities, while $5 billion of student debt was cancelled thanks to the public service loan forgiveness scheme.
Additional student loan write-offs will likely be on the way for certain groups, but there is little sign of a mass debt cancellation of the kind that Warren, Schumer and others will hope for.