Student loan company executives expect $10,000 relief per borrower
- Management at major student loan company Nelnet expects $10,000 in relief for federal borrowers.
- The Lincoln Journal Star reported that its CEO still thinks relief won’t solve higher education costs.
- Biden is closing in on a decision on broad student loan relief that could be income-capped.
Even the management of one of the largest student loan companies thinks relief for federal borrowers is on the horizon.
“The likelihood is pretty high” that President Joe Biden will write off $10,000 in student debt for federal borrowers, Jacque Mosely, director of government relations at student loan company Nelnet, said at the company’s annual meeting. last week, as the Lincoln Journal Star reported.
Jeff Noordhoek, CEO of the company, called the $1.7 trillion in student debt in the country “too big”. But, as the Journal Star reported, Noordhoek said forgiving that debt won’t solve the rising costs of higher education because people will continue to borrow after the fact. According to Jim Krueger, Nelnet’s chief financial officer, writing off $10,000 of debt for each federal borrower will reduce the company’s future cash flow by $1.8 billion to $1.2 billion.
Nelnet did not immediately respond to Insider’s request for comment.
President Joe Biden is set to make a decision on student loan relief, and multiple reports suggest the relief will be close to his campaign pledge of $10,000 forgiveness, and potentially targeted at those earning less than $10,000. $125,000 per year. With the pandemic pause in student loan repayments set to expire after Aug. 31, the administration has made it clear that relief will be made by then, and borrowers are waiting to hear if they will see a reduction in their balance.
With news of relief on the horizon, Nelnet wasn’t the only company to speak out on possible debt forgiveness. In March, the CEO of SoFi — one of the nation’s largest student loan refinance companies — Anthony Noto wrote that Biden had continued to “trivialize” over potential student loan relief, and he recommended that Biden fulfill its campaign pledge to cancel $10,000 in student debt, target the pause on payments only for those in “severe hardship” and put “wealthy and able” borrowers back in repayment when payments were due to resume on the 1st may.
Following the extension of the payments pause until August 31, SoFi then updated its 2022 guidance to note that it assumes payments will not resume in 2022.
Insider previously reported lobbying from student loan companies that may be blocking Biden from providing broad relief to federal borrowers. Nelnet, for example, spent $230,000 on lobbying in 2020 and made over $352 million in profit, and all student loan companies spent nearly $4.5 million on lobbying efforts in the year. latest, according to OpenSecrets.
Despite lobbying and pushback from Republican lawmakers, who argued that canceling student debt would exacerbate inflation and cost taxpayers, it is increasingly likely that some type of blanket relief will be put in place. work. The question now is how much relief, and Democrats want to make sure Biden goes big and doesn’t skimp on his executive authority.
“To close the racial wealth gap and advance a fair and equitable economic recovery for all, we must ease the burden of student debt,” Joyce Beatty, chair of the Congressional Black Caucus, said in a recent statement. “Nothing is on the table except inaction.”