Student loan relief may end soon, but borrowers want student loans forgiven
Student loan relief may end soon, but student borrowers now want their student loans forgiven.
Here’s what you need to know.
With student loan relief set to end on May 1, 2022, the next question is: Is student debt cancellation next? Some see student loan relief as effective student loan forgiveness for 40 million student borrowers. Others say it was just a temporary relief that didn’t really write off student debt. Who is right ? Let’s break down the pros and cons of large-scale student loan forgiveness and what each side really wants.
Student Loan Forgiveness Means More Student Loan Relief
When student loan relief ends on May 1, student borrowers are hoping for at least one of two things: an extension of student loan relief and large-scale student loan forgiveness. (Student borrowers will get $15 billion in student loan forgiveness). As of March 2020, federal student loan borrowers benefit from temporary student loan forbearance, which includes no mandatory federal student loan payments, 0% interest rates, and no collection of defaulted student loans. Now, student borrowers, advocates and activists want student borrowers to get student loan forgiveness on a massive scale. They claim, among other things, that:
- Canceling student loans will stimulate the economy;
- Cancellation of student loans will help borrowers free themselves from mounting debt;
- Student loan forgiveness will help borrowers afford to marry and start a family;
- Student Loan Forgiveness will help borrowers buy a home, save for retirement and start a business;
- Student loan relief will help reduce disparities.
(Here’s Who Won’t Get Student Loan Forgiveness)
Why canceling a student loan is bad policy
When student loan relief ends on May 1, opponents of student loan relief say temporary student loan forbearance should end and there should be no large-scale cancellation of student loans. student loans. Opponents argue, among other things, that:
- Student loan relief is set to end after two years of substantial student loan forbearance.
- Canceling student loans is too expensive, with a potential cost of $1 trillion if up to $50,000 in student loans are canceled for borrowers.
- Cancellation of student loans is not necessary as the economy has recovered and the Covid-19 pandemic is different than it was in March 2020.
- Student loan relief will have saved student borrowers an estimated $120 billion in student loan interest.
- Student loan forgiveness isn’t fair to the 80% of American adults who don’t have a student loan or haven’t attended college.
- Student loan forgiveness is only a one-time help, so it does not solve the underlying problem of high tuition fees or help future student borrowers.
- Student loan forgiveness targets a segment of the population, but ignores other borrowers who are in financial difficulty, such as those with mortgage or credit card debt. ($2,000 per month, demand for stimulus checks hits 3 million)
Student loan cancellation: Congress and Biden will have to work together
If there is going to be large-scale student loan cancellation, it will take consensus. Currently, progressive members of Congress are pressuring the president, who is a fellow Democrat, to enact large-scale student loan forgiveness and have resorted to an intra-party battle. (The student loan forgiveness may be the reason the Democrats lose the midterm elections). The president called on Congress to forgive up to $10,000 in student loans. However, progressives are focused on forgiving up to $50,000 in student loans and have not backed down — despite opposition to that plan in Congress and from the president. The result is a dead end. If there won’t be large-scale student loan forgiveness, it’s worth communicating this as soon as possible to student borrowers so they don’t hope for student loan relief that never comes. (What Biden must believe for there to be student loan forgiveness). Instead, it would be more effective to help provide a clear path for student borrowers to resume student loan repayments on May 1. Focus on helping student borrowers who are experiencing financial difficulties, especially borrowers who are in default or behind in repayment. Help them readjust and get back on track. Give borrowers a grace period to return to student loan payments. The more notice borrowers have, the better.
Finally, since there is no guarantee of student loan forgiveness, find out about all of your student loan repayment options. Here are some popular strategies for paying off student loans faster: