President-elect Joe Biden will extend the federal student loan stoppage to nearly a year on “first day”, the first concrete contract the incoming administration has made to handle. With a debt crisis worth $ 1.6 trillion
David Kamin, Biden’s transformation officer, told reporters on Friday: “Reducing the financial burden of student debt” will be immediately important for incoming administration as part of its commitment to This includes directing the Department of Education on a “first day” to expand student loan saving programs, as well as the “First Day”; to expand our student loan saving programs. “Expanding the Income-Based Repayment Program and Amending and Expanding the Loan Disbursement Program for People with Public Service”
But how the incoming administration will deal with student loan forgiveness for other borrowers is unclear. In a call with reporters, change officials said Biden “encouraged Congress to immediately cancel the $ 10,000 per student federal student loan debt in response to the COVID crisis” but did not provide a specific detail or timeframe.
Student loan debt is a financial problem that has existed before the outbreak. But the widespread coronavirus-related job loss and wage cuts, especially among millennials, have exacerbated the problem. Last year, student loan debt hit a record near $ 1.6 trillion among more than 40 million Americans, according to the Reserve Bank of New York. On average, student loan borrowers owe between $ 200 and $ 299 every month, which, for many, is unprotected. About one in every five borrowers default on debt, according to the U.S. Department of Education.
Democrats split up on how to deal with the crisis. The idea of student loan abolition was originally caught in the party’s more progressive pocket money. During the 2020 presidential race, Senator Elizabeth Warren of Massachusetts proposed removing as much as $ 50,000 in debt, and independent Senator Bernie Sanders of Vermont called for the repeal. All student loans In a more moderate approach, Biden expressed his support for a Congressional law that would repeal $ 10,000 per borrower.
Regardless of how specific Mr Biden’s plan is, this approach is likely to confront management’s current stance. In a letter earlier this week, former US Education Secretary Betsy DeVos urged Congress to “reject” the call to remove student loan debt, calling the policy proposal “misunderstood” and “unfair to Americans. Mostly “
Since March, all federal student loan payments have been suspended as part of the federal COVID-19 response. An extension of the grace period is included in the draft stimulus package in early December. But was eliminated in the final negotiations. Student loan payments are currently scheduled to resume at the end of this month. The Changes team did not specify how long the new extensions will last.
A Pew study from November found that nearly six in 10 borrowers said it would be “quite” or “very difficult” to start paying off new loans next month.
When student loan payments come back to work, the Department of Education doesn’t expect the transition to be smooth. In its 2020 annual report, the department said it expected loan providers and the federal government to “It faces the heavy burden of ‘converting’ millions of borrowers into active repayment,” the report warned some borrowers will become overdue.
Alex Tin contributed reporting to this article.