With student debt now approaching $2 trillion, the Biden administration is considering cancellation of perhaps $10,000 of many people’s obligations. If so, that’s a move long-sought by progressives and opposed by some conservatives.
Would it be sufficient to address the problem, or are more sweeping measures needed? That remains to be seen.
Emily Kralick graduated from Cal Poly Pomona with about $13,000 in student loan debt. Six years later, it still hangs over her.
“No matter how I slice it, like if I have a good month at work, if I’m super frugal, I’m still carrying around this $13,000 that doesn’t seem to be moving,” she said. “I feel like I can’t make a dent in it.”
President Biden recently extended a moratorium on student loan payments to September. The average debt load for a student borrower now tops $30,000.
Total U.S. student debt has soared from about $980 billion in 2011 to $1.7 trillion as of last year. That’s roughly double what Americans owe for credit cards.
And the problem extends well beyond young people.
“In reality, the fastest growing number of student loan borrowers are people who are 55 or over,” said Whitney Barkley-Denney, senior policy counsel for the nonprofit Center for Responsible Lending.
She’s no stranger to these issues. Barkley-Denney is carrying more than $100,000 in debt related to her law degree.
Last month, the Biden administration eased the debt load of millions of student loan borrowers. They had expected help from the Education Department that never arrived because of past mismanagement.
But what now?
“We know that there are a lot of challenges facing borrowers,” answered Kelly Leon, press secretary for the U.S. Department of Education.
“We’re taking action now, trying to help borrowers manage those repayments and fixing programs that can help them get to debt relief faster.”
Some progressives, including Vermont Senator Bernie Sanders, are calling for cancellation of some or all student debt.
They say this would provide a shot of adrenaline to the economy. Critics say such a move would unfairly benefit more privileged members of society.
Leon said the Biden administration is open to all possibilities.
“We are continuing to explore our options and what we can do with respect to broad-based cancellation,” she said.
One wild card: How to address the disproportionately large impact of student loan debt on people of color.
“Because Black families have less wealth to rely on, we see that Black families take on way more debt to go to school, take longer to pay it off and have more trouble paying it off,” says Barkley-Denney.
This can cause a greater proportion of Black borrowers to go into default or delinquency.
Some experts believe the 1965 Higher Education Act empowers the president to order the Education Department to cancel student loans controlled by the government. Which is to say, an act of Congress may not be needed.
I asked Leon about that. She declined to comment.