Nate Wlodarchak, left, and husband Shawn Wlodarchak.
Source: Nate Wlodarchak
While Nate Wlodarchak took people to the polls on election day, he couldn’t stop imagining his life without student debt. On the campaign trail, President Joe Biden had now pledged to forgive $ 10,000 of the loans to all borrowers, which would virtually zero Wlodarchak’s balance.
Without the loans weighing on him, Wlodarchak, 37, a scientist who studies tuberculosis, could spend more of his salary on his savings every month. And he and his husband, Shawn, who live outside of Denver, can finally start thinking seriously about the many goals, like having children, that they’ve had to put on the back burner.
Now, Wlodarchak and tens of millions of other borrowers saddled with student loans are looking to the new president to ease some of their debt. “We have taken his promise to make it a core priority,” said Wlodarchak.
However, as the Biden government finds itself in a dual and historic economic and health crisis, student loan forgiveness may not come as quickly as some might have hoped. Vaccinating people against Covid, reopening schools, and getting financial aid for the unemployed and food-insecure Americans are likely to be priorities.
More from Personal Finance:
College can cost as much as $ 70,000 per year
Under Biden, free college could become a reality
At Georgetown, tensions are mounting over distance learning
In addition, there is also a heated and unresolved debate over whether the debt cancellation should be met through legislation passed by Congress or through executive action by the president.
Proponents say that student debt cancellation is a critical part of any meaningful response to the coronavirus pandemic, pointing out that borrowers have been struggling before the crisis. Indeed, even before nearly a year of record job losses and when the country was in the midst of its longest economic expansion in history, more than 1 in 4 student loan borrowers were in arrears or default.
Others point out that people of color are suffering the most from the student loan crisis, and that it is also black and Latino Americans who have suffered the most from the coronavirus pandemic. An assistant to Sen. Elizabeth Warren, D-Mass., Said that canceling the student debt would be the biggest advance toward closing the racial wealth divide since the civil rights movement.
“Debt forgiveness would have a tremendous impact on those most affected by the coronavirus pandemic: black Americans, older borrowers and recent graduates,” said Alexis Goldstein, a senior policy analyst with Americans for Financial Reform.
On his first day of work, President Biden signed an executive order extending the pause on monthly payments for borrowers on federal student loans through September 2021.
Mike Calhoun, chairman of the Center for Responsible Lending, called the move “a critical first step,” but went on to say that he hopes “the government will consider blanket cancellation, which can provide families with a path to equality and financial progress. “
At a news conference in late November, a reporter asked then-elected President Biden where he stood for forgiveness of student loan debt.
“They’re in real trouble,” said Biden of borrowers. ‘They have to make choices between paying their student loan and paying the rent, decisions like that. It has to be done immediately. ‘
However, the president’s plan for a $ 1.9 trillion stimulus package unveiled this month makes no mention of canceling student debt. Senior officials from the Biden administration claim the president still supports $ 10,000 in forgiveness per borrower.
“It’s hard to know how to read the tea leaves,” said Rick Hess, director of educational policy studies at the American Enterprise Institute.
Legislation is unlikely to be proposed until late summer or early fall.
Mark Kantrowitz
higher education expert
Higher education expert Mark Kantrowitz said Biden’s Covid aid plan focuses on the most pressing issues of the public health crisis, and that debt cancellation is likely to come later.
“I think the chances of some student loan forgiveness being granted are as high as ever,” Kantrowitz said. “But legislation probably won’t be proposed until late summer or early fall.”
Passing on that legislation can be difficult.
Even with the Democrats’ victories in the Georgia Senate, they have had the smallest majority and only have 50 Republicans out of 50, with Vice President Kamala Harris able to handle a draw if necessary. Many on the right argue that a student debt anniversary would not significantly boost the economy, as graduates generally have higher incomes and are likely to redirect their monthly bills to savings rather than additional expenses.
Proponents and other Democrats are calling on Biden to cancel the debt earlier through executive measures, arguing that the legislative path is too time-consuming and risky.
The Senate’s top Democrat, Chuck Schumer, DN.Y., is urging Biden to immediately forgive $ 50,000 per borrower. “All you need is a quick flick of a pen,” said Schumer last month. “You don’t need a conference.”
And Warren described student debt cancellation as “the most effective economic stimulus available through executive action.”
In response, Biden said it is “ unlikely ” that he will single-handedly forgive $ 50,000 in student debt for all borrowers, although a Warren aide said they are continuing to refer the matter to the new administration for some sort of debt cancellation by the president.
For now, Wlodarchak remains hopeful that his student loans will eventually be forgiven. He has his plan for if and when they are: He takes his husband to a fancy surf-and-turf dinner.
And he even knows what to order. “A porter’s house with morels and cold water lobster, red wine of course,” he said. “Oh, and Bananas Foster for dessert!”