Why President Biden’s Pupil 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 give 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.
Given Biden’s dual and historic economic and health crisis, student loan forgiveness may not be coming as quickly as some had hoped. Vaccinating people against Covid, reopening schools, and providing financial aid to unemployed and food insecure Americans are likely to 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 nearly a year ago with 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 default.
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 student debt relief would make the greatest strides in closing the racial prosperity gap since the civil rights movement.
“Debt relief would have a huge 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, called the move “a critical first step,” but hopes that “the administration will consider a blanket resignation that can provide families with a path to equity 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,” Biden said 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 draft stimulus package of $ 1.9 trillion unveiled this month makes no mention of canceling student debt. Senior officials in the Biden administration claim the president still supports $ 10,000 in 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 will probably not be proposed until late summer or early fall.”
Adopting this legislation could prove difficult.
Even with the Democratic Senate victories in Georgia, they got the smallest majority and only 50 members out of the 50 Republicans, with Vice President Kamala Harris holding a groundbreaking vote if necessary. Many on the right argue that a college student debt jubilee wouldn’t kick the economy much, as college graduates tend to be higher-income individuals who would likely redirect their monthly bill towards savings rather than additional expenses.
Proponents and other Democrats argue that the legislative process is too time consuming and risky, and urge Biden to use executive action to reduce 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 $ 50,000 student debt for all borrowers alone, although an adviser to 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 will 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!”