The latest on student loan payments and forgiveness under the Biden administration
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As a presidential candidate, Joe Biden said student loan relief was an important part of his economic recovery plan and that if elected, loan forgiveness would be a priority. What progress has his administration made so far?
Nearly 45 million Americans owe a cumulative $1.7 trillion in student loan debt as of 2021. The cost of a higher education has increased over the last 10 years and student debt has surged by 99%. Around 70% of students take out loans to pay for college.
Gender and racial disparities also exist among borrowers. Women have more student debt than men. Black women owe 20% more for student loans than white women.
On the campaign trail, now President Biden pledged to forgive debts of $10,000 per person. More than a year later, that promise remains unfulfilled. Instead of broad forgiveness, Biden has focused on improving, extending or expanding preexisting forgiveness programs that had been plagued by complexities and mismanagement.
The administration has erased or is in the process of discharging $12.7 billion in student debt for more than 638,000 borrowers with permanent disabilities, students defrauded by for-profit colleges or who attended schools that were forced to close, and individuals who completed a decade of public service.
Why was it previously so difficult to get loans erased through these programs? What's been done to streamline the process?
Student loan payments put on hold during the pandemic are on track to resume February 1 after the Biden administration declined to further extend the freeze. Why was the decision made to unfreeze payments? What do borrowers need to know and do as they resume? Will more borrowers default on their student loans amid historically high inflation?
Where are we now with complete or partial student loan forgiveness? What proposals are being considered? How would they work and who is most likely to benefit? Will critics who say borrowers have a responsibility to repay those debts be at all willing to compromise?
How much of an impact would student debt erasure have on borrowers’ financial well-being? How could it impact the overall economy?
What is the likelihood of broad loan forgiveness? Would doing so solve the student debt crisis or does the system itself need a complete overhaul?
- Nicole Smith, Ph.D., research professor and chief economist for the Georgetown Center on Education and the Workforce
- Abigail Johnson Hess, reporter for CNBC Make It
- Jaylon Herbin, policy and outreach associate who co-leads the student loan team at the Center for Responsible Lending
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