More than half of student loan borrowers say they “don’t feel confident” that they will be able to repay their loans after the pandemic forbearance period ends in late January, but top Democrats are hopeful of pushing sweeping legislation that could cancel up to $50,000 of student debt per borrower.
The widespread forgiveness plan proposed by Senate Minority Leader Chuck Schumer, D-N.Y., and Sen. Elizabeth Warren, D-Mass., urges President-elect Joe Biden to use executive authority to immediately cancel up to $50,000 of student debt per borrower when he assumes office.
The senators have argued that broad cancellation of student loan debt would free up about $200 to $300 per month for millions of Americans. They maintained that Biden could use existing executive authority under the Higher Education Act to order the Department of Education to “modify, compromise, waive or release” student loans.
Schumer previously estimated his proposal would provide total forgiveness to more than 75% of borrowers and partial forgiveness for more than 95%.
Biden had floated a more modest plan on the campaign trail that still boasts an estimated $300 billion price tag.
Biden said he’d be willing to forgive $10,000 in student loan debt as part of a broader coronavirus relief package. Under that proposal, economically distressed borrowers would immediately have $10,000 in student debt forgiven. The government would also cover monthly loan payments for people with private student loans until September 2021 and forgive $10,000 of their debt.
Nearly 55% of federal student loan borrowers said they “were not confident they’ll be able to make payments consistently once student loan forbearance ends,” while about 29% were unsure about covering their first payment when it’s due, according to a survey by Student Loan Hero, a byproduct of loan agency Lending Tree.
Congress passed legislation under the CARES Act to halt student loan repayments until Jan. 31, with no interest accrued.
Data from Lending Tree suggests the average monthly student loan payment, not counting those in deferment, ranges from $200 to $299, a steep price to pay, especially as unemployment continues to soar amidst the pandemic.
Female borrowers furloughed during the pandemic seemed to be the most worried about the moratorium expiring, with 65% surveyed saying they were worried they would not be able to make payments, compared to 43% of male borrowers.
Congress has yet to agree on a bipartisan bill that millions of Americans are waiting on as a life raft during the worsening pandemic.
Congress passed a stopgap bill Wednesday to avert a government shutdown and fund the government through Dec. 18, giving lawmakers an extra week to haggle over an omnibus spending bill, which is expected to roll in COVID-19 relief into one huge package.
A bipartisan group of senators last week unveiled a $908 billion coronavirus relief deal that included about $300 billion in funding for small businesses through the Paycheck Protection Program, $240 billion in aid for state and local governments, $180 billion to extend boosted unemployment benefits at $300 per week for four months and a temporary moratorium on COVID liability lawsuits to allow states enough time to design their own laws.
Lawmakers are hopeful on reaching an agreement before they break for the holidays, but Senate Majority Leader Mitch McConnell, R-Ky.has said he has his own targeted coronavirus relief bill based on what President Trump would sign into law.