According to the U.S. Federal Reserve, there was $1.7 trillion in outstanding student loan debt as of June.
Much of that debt has not been paid since the COVID-19 pandemic began and student loan payments were suspended. All interest on those loans was temporarily eliminated as well, and collections on defaulted loans were stopped.
The Biden administration has extended the pause until Jan. 31, 2022.
During a visit to Rochester early this week, U.S. Sen. Chuck Schumer wore a “Cancel Debt” face mask. The New York Democrat said it's time for the federal government to forgive $50,000 in student debt per person.
“So many students have this debt burden. A huge burden. College should be a ladder up. For too many kids and their parents, it's an anchor around their ankles,” said Schumer.
“We’ve talked to (President Joe Biden),” he continued. “He hasn’t taken it off the table. We urge everyone and their family and friends who care about this to send an email, a letter, a card, a call to the president.”
Rep. Joe Morelle (D-25) said that kind of law passing now is unlikely with so many other projects on the table. When it comes to addressing student debt, Morelle is in favor of free community colleges nationwide, making refinancing loans easier, and potentially applying previously paid interest on student loans.
He’s also one of the congressional Democrats in favor of forgiving $10,000 in debt per person. Morelle would attach strings to debt forgiveness.
“I think the talk about forgiveness is a real one. I think it's important. I think it will be perhaps more modest than some of our members are talking about. It's that $10,000 number that seems to be getting the most traction,” Morelle said.
“I think it ought to be means tested,” he continued. “I think if you’re a really high income earner in the United States, I’m not sure why working men and women, some of whom didn't have the chance to go to college, should be erasing their debt. So it ought to be means tested.”
But when it comes to handling mounting student debt, advisers such as Pamela Hart from the nonprofit Consumer Credit Counseling Service of Rochester said borrowers shouldn’t plan on it. Hart said many of her clients aren’t.
“They’re not counting on it,” Hart said Wednesday. “They’re looking at it as they have this student loan debt, if something was to happen, and we were all blessed with that -- whether it was $10,000 or $50,000 being erased -- they’d be happy.”
Hart advises her clients to take advantage of this forbearance window to pay down the principal of their student loans, other debt and work on their creditworthiness.
For other student loan borrowers, Hart’s colleague Andrea Colline has a warning. She said the unusual length of this forbearance can be deceiving.
“Don’t get too comfortable," Colline said. "I know that’s hard to say because it's been going on for so long now, but don’t get too comfortable and plan on making those payments.”
