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While the latest stimulus package and a new massive infrastructure bill have been the main topics of conversation in Washington lately, President Joe Biden continues to be under increasing pressure to take steps to forgive student loans.
Senator Elizabeth Warren, D-Mass., Held a hearing Tuesday afternoon on the student loan debt burden and urged Biden to cancel it as soon as possible.
“The United States is facing a student loan bomb that, when it explodes, could throw millions of families on a financial cliff,” Warren said. “The average borrower will have to start paying almost $ 400 a month to the government instead of spending that money on the economy.”
Warren also discussed racial inequalities in student debt, noting that the median black borrower still owes 95 percent of the original amount they borrowed 20 years after taking out the loans. Meanwhile, the average white borrower owes only 6% of the original amount he borrowed two decades later.
“This is the most powerful executive action President Biden could take to advance racial equity and give all the United States the opportunity to build a future,” Warren said.
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Also Tuesday, more than 415 organizations, including the American Civil Liberties Union, the American Psychological Association and the Consumer Federation of America, wrote a letter to Biden and Vice President Kamala Harris asking the White House to use executive power “to cancel student debt immediately “.
“Before the public health crisis of Covid-19 began, student debt was already an obstacle to the national economy, which weighed more heavily on black and Latino communities, as well as on women,” the organizations wrote. .
“The cancellation of administrative debt will allow for real progress in your racial equity, economic recovery and the priorities of the Covid-19 relief campaign.”
Senate Majority Leader Chuck Schumer of New York and other Democratic lawmakers have also asked the White House to forgive $ 50,000 in student debt for all borrowers through executive action.
“You don’t need Congress,” Schumer said. “All you need is a touch of a pen.”
On the campaign trail, Biden said he supported $ 10,000 in student loan forgiveness, but that he is pressuring members of his own party, advocates and borrowers to go further by canceling $ 50,000 per person and do so through executive actions.
White House Press Secretary Jen Psaki recently suggested that the administration had not ruled out the possibility of forgiving the debt without Congress. In his first day in office, Biden extended a pause in payments for federal student loan borrowers that has been in effect from March through next September.
And Biden has asked Secretary of Education Miguel Cardona to prepare a report on the president’s legal authority to cancel up to $ 50,000 in student debt per borrower. The conclusions of this note have not yet been made public.
Critics of student loan forgiveness argue that it would not significantly stimulate the economy, as college graduates tend to be higher winners who would likely redirect their monthly payments to savings rather than additional expenses. Others say it would be unfair for those who have already paid off their student debt or who have never taken out loans and would send the message that it is okay for people to leave their debts.
Advocates claim that borrowers already had problems before the public health crisis (with more than one in 4 borrowers in arrears or delinquency) and that after a year of record unemployment levels, this pain has only worsened.
The vast majority (or about 90%) of federal student loan borrowers have taken advantage of the government’s option to stop their monthly payments during the coronavirus pandemic, according to the data. And in a recent Pew survey, 6 out of ten borrowers said it would be difficult for them to repay their student loans next month.
Advocates also point out that it is people of color who are suffering the brunt of the student loan crisis, and it is also blacks and Latin Americans who have suffered the most from the coronavirus pandemic. An aide to Senator Warren said the cancellation of student debt would make great strides toward bridging the racial wealth gap from the civil rights movement.
A poll found that 58% of registered voters supported student loan forgiveness and a Change.org petition calling on the president to cancel student debt has now garnered close to a million signatures.
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