The imminent end of the moratorium raises financial questions – NBC Boston
A pause in federal student loan payments is set to end on August 31, with President Joe Biden set to decide whether to extend the moratorium again or heed calls to write off student debt.
“There are a lot of questions being asked. There hasn’t been an official plan announced by the Biden administration at this point,” said Kristina Carvalho, political and community organizer at Zero Debt Massachusetts.
An estimated 42 million federal borrowers have not had to make payments since March 2020. As the deadline approaches, Carvalho says many are already facing financial anxiety as they battle the ‘inflation.
“Especially with the cost of living. I mean, we’re in Boston. That rent is going up again. And the average student loan [debt] for Massachusetts borrowers is about $40,000,” Carvalho said. “It really impacts people financially but also emotionally and mentally.
Biden has indicated he is ready to forgive $10,000 for borrowers under a certain income, but his administration has made no announcement on the matter.
Senator Elizabeth Warren has taken center stage in recent weeks, speaking as one of the strongest Democratic voices on major issues like Roe v. Wade, student loan debt and price gouging. Here is his interview with NBC10 Boston political reporter Alison King.
Sen. Elizabeth Warren, D-Mass., is among lawmakers asking the president to forgive up to $50,000 in debt.
“If the president canceled $50,000 in student loan debt, we could cancel out the overall black-white wealth gap for people with 27-point student loan debt,” Warren said during a roundtable with the Boston Teacher’s Union in Dorchester on Wednesday. “We now have a racial equity gap so that African Americans, Latinos, borrow more money to go to school, borrow more money while in school and have more hard to pay it back when they get out of school.”
“It’s about racial justice, it’s about gender justice,” said Rep. Ayanna Pressley, D-Mass. “Listen, I also paid off my loans, but I want better for my daughter and the next generation, and you should too.”
Their proposal would cost around $1 trillion.
“Cancelling up to $50,000 of student debt has a cost similar to the cumulative amount spent on Supplemental Security Income (SSI) and all housing assistance programs since 2000,” researcher Adam Looney wrote. non-resident principal at Brookings. “Even $10,000 of debt forgiveness would imply a transfer about as large as what the country has spent on welfare (TANF) since 2000 and exceeds the amount spent since then to feed starving schoolchildren in schools. very poor through the school breakfast and lunch program.”
With student loan repayments set to resume in September, the Biden administration has yet to make a decision on debt cancellation or another postponement of the payment freeze. Cody Hounanian, executive director of the Student Debt Crisis Center, explains why he’s optimistic about canceling student debt.
“Every time you write off someone’s debt, someone will have to bear that cost, and that’s going to be the Treasury. And there’s no question about that. But you have to balance that with the social costs of those very high default rates. “, he added. said Kathleen Engel, a professor at Suffolk University.
She says she favors forgiveness of up to $10,000 of debt per borrower.
“Because what we know is that the people who are defaulting are most often people with low debt who went to schools that didn’t have substantive educational programs, so people can’t not get good jobs afterwards,” Engel said. . “Or the programs have defrauded them in different ways, and they can’t get credit for the courses they’ve taken, a number of things like that. What worries me is that people who don’t can’t even put their feet on the ground because they have this debt.”
She says an inequality in access to information has contributed to the problem of student loan defaults.
“These intermediaries, the managers, really failed the borrowers and in that way also failed the country,” Engel said.
Emy Takinami would like all student debt to be eliminated.
“I have student debt,” she said. “I come from a first-generation, working-class immigrant family.”
The $10,000 student debt forgiveness plans won’t cover everything borrowers still owe. But the break has been helpful for a very small percentage who continue to repay their loans during the break – with those payments being made in full in principal. CNBC’s Sharon Epperson explains.
She serves on the advisory board of Zero Debt Massachusetts and says her experience working as a college access counselor for first-generation low-income students has informed her perspective.
“Our higher education system and structure has not been put in place to support and enable first-generation students to succeed, especially the way higher education is funded,” she said. “I just saw a lot of students having to drop out, take a break, go to schools they weren’t interested in, because they couldn’t afford the price to go to the schools they wanted. go.”
Takinami earned an undergraduate degree and a graduate degree in social work. She says the pause on student loan repayments has brought some economic relief, but ending it without canceling student loans would affect future economic decisions.
“It certainly had an impact on our own ability to think about the future, about the future, about trying to save money to buy a house, have children, all that stuff,” she said. declared. “I think the pause has allowed borrowers to do so much, and it’s almost a preview of what debt cancellation will look like.”
The Massachusetts Attorney General’s Office has a Student Loan Assistance Unit available to answer questions and provide resources for people who are struggling to pay student loans.