Nate Wlodarchak, left, and her 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. In the campaign, President Joe Biden had now promised to forgive $ 10,000 of loans to all borrowers, which would practically zero out Wlodarchak’s balance.
Without loans weighing on him, Wlodarchak, 37, a scientist who studies tuberculosis, could target more of his paychecks to his savings each month. And he and her husband, Shawn, who lives on the outskirts of Denver, can finally begin to seriously think about the many goals, like having children, that they had to leave in a double boiler.
Now Wlodarchak and tens of millions of other borrowers overwhelmed with student loans hope the new president will ease some of his debt. “We take his promise to make it a top priority seriously,” said Wlodarchak.
However, with the entry of the Biden government in the midst of double and historic health and economic crises, student loan forgiveness may not arrive as fast as some expected. Vaccinating people against Covid, reopening schools and obtaining financial relief for unemployed and food insecure Americans are likely to be a priority.
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In addition, there is also a heated and unresolved debate over whether debt cancellation should be delivered through legislation passed by Congress or executive action by the president.
Supporters say forgiving student debts is a crucial part of any significant response to the coronavirus pandemic, pointing out that borrowers were already struggling before the crisis. In fact, even before almost 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 was in default or in default.
Others point out that it is the people of color who bear the brunt of the student loan crisis, and also the blacks and Latin Americans who have suffered most from the coronavirus pandemic. An aide to Senator Elizabeth Warren, D-Mass., Said that canceling student debt would represent the greatest advances in bridging the racial wealth gap since the Civil Rights movement.
“Debt cancellation would have a tremendous impact on those most affected by the coronavirus pandemic: black Americans, older borrowers and recent graduates,” said Alexis Goldstein, senior policy analyst at American for Financial Reform.
On his first day in office, President Biden signed an executive order extending the break in monthly payments to federal student borrowers until September 2021.
Mike Calhoun, president of the Center for Responsible Lending, called the action “a critical first step”, but said he hoped “the government will consider general cancellation, which can provide families with a path to equity and financial advancement.”
At a news conference in late November, a reporter asked then-elected President Biden where he forgave student loan debt.
“They are in real trouble,” said Biden, about borrowers. “They are having to make choices between paying the student loan and rent, that kind of decision. This must be done immediately.”
However, in the president’s draft for a $ 1.9 trillion stimulus package released this month, there is no mention of student debt cancellation. Senior Biden government officials say 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.
The legislation is unlikely to be proposed until late summer or early autumn.
Mark Kantrowitz
specialist in higher education
Higher education expert Mark Kantrowitz said that Covid de Biden’s relief 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 enacted are as good as before,” said Kantrowitz. “But the legislation is unlikely to be proposed until late summer or early fall.”
Passing such legislation can be difficult.
Even with the Democrats’ victory in the Senate in Georgia, they won the smallest majority and have only 50 members against 50 of the Republicans, with Vice President Kamala Harris being able to cast the tie vote when necessary. Many on the right argue that the student debt jubilee would not significantly stimulate the economy, as college graduates tend to earn more, which would likely redirect their monthly bill to savings rather than additional spending.
Arguing that the legislative path is too long and risky, advocates and other Democrats are asking Biden to cancel the debt earlier through executive action.
The Senate’s top Democrat, Chuck Schumer, DN.Y., is pressing Biden to immediately forgive $ 50,000 per debtor. “All you need is a touch of a pen,” said Schumer last month. “You don’t need Congress.”
And Warren described student debt forgiveness as “the most effective economic stimulus available through executive action”.
In response, Biden said it would be “unlikely” to cancel $ 50,000 in student debts for all borrowers alone, although an adviser to Warren said they continue to present the case to the new government for the cancellation of some debt by the president.
For now, Wlodarchak remains hopeful that his student loans will eventually be forgiven. He has a plan for if and when it happens: he will take her husband to a fancy surf and turf dinner.
And he even knows what he’s going to ask for. “A porterhouse with mushrooms and a cold water lobster, red wine, of course,” he said. “Oh, and Bananas Foster for dessert!”