Student loan borrowers are counting the days before student debt raises its menacing head once again: After a 21-month pause on student loan payments, put in place by the CARES Act to alleviate pandemic financial strain, payment requirements will resume Feb. 1, 2022.
Few are ready. But there is a way to lift the upcoming burden for good: Cancel federal student debt.
The AFT is one of 105 organizations to officially urge President Joe Biden to cancel $50,000 in student debt for millions who have taken out federal loans to finance their college education. Other signatories include the American Association of University Professors, the American Civil Liberties Union, the Center for Economic Integrity, the League of United Latin American Citizens, the National Black Justice Coalition, the National Education Association and The Education Trust.
This issue is urgent, as so many people continue to feel the economic effects of the pandemic: job loss, illness, loss of family members, school closures and more. Even before the pandemic, borrowers struggled to keep up.
And according to a survey from the social impact technology company Savi and the Student Debt Crisis Center, 89 percent of student loan borrowers are not financially ready to resume payments in February.
“We believe that you do have the legal authority to cancel student debt,” the student debt relief advocates write in a letter to Biden, adding that a memo from White House experts on whether the president has the authority to cancel student debt will confirm that authority. “Canceling up to $50,000 in student debt would provide transformational relief to about 80% of those with student debt,” the letter continues. The move would not only alleviate financial distress for individual borrowers, it would boost the economy by allowing those borrowers to participate more fully.
National numbers, personal impact
Student debt in the United States has climbed to $1.8 trillion—that’s trillion with a T. Some 45 million people hold an average of nearly $30,000 in debt. Some carry six figures of debt they’re sure will hang over their heads for a lifetime.
The numbers are convincing enough, but their everyday impact on individuals is even more compelling. About half of student loan borrowers report that their debt has influenced life decisions, according to the National Association of Realtors. More than a quarter of borrowers say their debt has affected whether they buy a home; 14 percent say it’s affected whether they start a family.
Nicole Brun-Cottan, an AFT member and physical therapist, is living in her mother’s basement, trying to save money so she can pay off her student loans. With more than $100,000 in student debt, her career has been stifled as well. “I would welcome the opportunity to take a job in one of the many rural communities that are staggeringly underserved,” she writes in AFT Voices. “I would be delighted to volunteer my time to health and wellness programs that address disparities in communities that lack access to preventative medicine.” But like so many other borrowers, she cannot afford to change jobs or volunteer her time.
“Over the last 20 years, an entire generation of students were told that the best way to climb the economic ladder in an ever-changing competitive world was to go to college, and that student loans were a ‘good debt’ product that could help them attain that education,” reads the letter to Biden. “However, the price of college has risen exponentially while wages have remained stagnant, and an entire generation spent their formative years fighting to keep up in the midst of two recessions and a pandemic.”
Systemic inequity and making a difference
The letter also notes that canceling student debt would address long-standing systemic inequality that leaves Black, Indigenous and other people of color with more debt and less wealth. The AFT explores this further in this AFT Voices post, noting higher numbers of loans in this demographic, higher loan amounts and lower overall salaries to pay them back.
But canceling student debt is not just good for some people: As the letter states, it would “stimulate the economy in ways that would benefit the entire country.”
“The loan pause during the last year has made a great difference in my life,” says Darimir Perez, a middle school guidance counselor and a member of the United Federation of Teachers in New York City. “I was finally able to fully repay one of my loans. I was also able to pay off some medical bills, help my mom and family, put some money toward my kids’ education and cover current medical bills due to COVID-19.”
She’s not the only one: According to the Roosevelt Institute, “trends on saving behavior amid the quasi-experiment of the CARES Act payment freeze provide new evidence that student debt burdens represent a substantial impediment to asset building.” Canceling student debt, the Biden letter reads, would lead to “‘consumer driven economic stimulus, improved credit scores, greater home-buying rates and housing stability, higher college completion rates, and greater business formation.’”
In addition to the recent letter to Biden, 415 organizations urged him to cancel student debt last spring, including the AFT. They were led by Americans for Financial Reform, the Center for Responsible Lending, the National Consumer Law Center, the Student Borrower Protection Center, the Student Debt Crisis Center and Young Invincibles. More than 300 faith leaders have also advocated for debt relief. Top Democrats have been advocating for $50,000 in relief for months.
Many AFT members are already getting some debt relief from changes to the Public Service Loan Forgiveness system, which for years was an impossible maze of regulations and disinformation. Through temporary waivers on old requirements, borrowers are shedding thousands of dollars’ worth of debt, but that program is only available to public service workers—and in many cases it is reducing, not eliminating, debt.
Having more permanent relief from her loans, says Perez, “would make a wonderful, positive difference in my life.”