Progressive Democrats are asking President Joe Biden to extend the pandemic-related pause on student loan payments that is set to expire Jan. 31 and would have been in place for almost two years.
Nearly 90% of student loan borrowers took the Education Department up on the president’s March 2020 COVID-19 pandemic offer to pause repayments, according to a new analysis from The Roosevelt Institute.
“Prior to the COVID-19 payments pause, student loan borrowers paid an average of $393 per month toward their student loans,” Senate Majority Leader Chuck Schumer, D-N.Y., Sen. Elizabeth Warren, D-Mass., and Rep. Ayanna Pressley, D-Mass., wrote in a letter to the White House on Wednesday.
“These payments hurt individual families and the economy as a whole and will have a significant negative effect if the administration ends the payment pause as scheduled.”
If the payments of federal student loans resume as scheduled Feb. 1, 2022, approximately $7 billion a month and $85 billion annually will be stripped from over 18 million student loan borrowers’ budgets, according to The Roosevelt Institute.
Debt cancellation could add more than $173 billion to the nation’s GDP in the first year alone, the analysis concluded.
“Black and Latinx households would feel a disproportionate negative impact from resuming student loan payments,” according to The Roosevelt Institute. “Borrowers of color typically borrow more for college expenses than their white counterparts while also holding significantly less wealth.”
The letter also renewed calls for Biden to push canceling student loan debt, a move Biden has been hesitant to make.
“The cancellation of up to $50,000 of student debt would relieve an enormous burden from borrowers while pumping billions of dollars per year back into our national economy,” the letter read. “We strongly urge you to act without delay.
“In the meantime, we strongly urge you to extend the pause on student loan payments, interest, and collections until the economy reaches pre-pandemic employment levels.”
Almost all borrowers (89%) are not financially secure enough to be ready for the restart of student loan payments, and the same percentage say the pause has been critical to their financial well-being during the pandemic, according to a Student Debt Crisis Center survey.
Experts on the other side of the argument note younger unemployment levels are near pre-pandemic levels and the market has jobs available.
“Unemployment rates have normalized,” education expert Mark Kantrowitz told CNBC. “Delinquency rates are better now than they were before the pandemic.
“Why is there a need for a further extension?”