Renewed calls for student loan forgiveness as moratorium ends – NBC10 Boston | Vette Leader

A pause in federal student loan payments is set to end Aug. 31, with President Joe Biden expected to decide whether to extend the moratorium again or answer calls for student debt forgiveness.

“A lot of questions are asked. At this point, no official plan has been announced by the Biden administration,” said Kristina Carvalho, policy and community organizer at Zero Debt Massachusetts.

An estimated 42 million federal student loan borrowers have not had to make payments since March 2020. As the deadline approaches, Carvalho says many are already facing financial anxiety as they struggle with inflation.

“Especially with the cost of living. I mean, we’re in Boston. The rent goes up again. And the average student loan [debt] for Massachusetts borrowers is around $40,000,” Carvalho said. “It’s really affecting people financially, but also emotionally and mentally.”

Biden has indicated he is willing to cancel $10,000 for borrowers below a certain income, but his administration has made no announcements on the matter.

Sen. Elizabeth Warren has been the center of attention in recent weeks, speaking out as one of Democrats’ strongest voices on major issues like Roe v. Wade, student loan debt and price gouging out. Here’s her sit-down interview with NBC10 Boston political reporter Alison King.

Sen. Elizabeth Warren, D-Mass., is among lawmakers asking the president to forgive up to $50,000 in debt.

“If the President canceled $50,000 on student loan debt, we could close the black-white wealth gap for people with student loan debt by 27 points overall,” Warren said Wednesday at a roundtable with the Boston Teachers’ Union in Dorchester. “We now have a racial justice gap so that African Americans, Latinos, borrow more money to go to school, borrow more money while they’re in school, and have a harder time paying it back when they leave school.”

“It’s a racial justice issue, it’s a gender justice issue,” said Rep. Ayanna Pressley, D-Mass. “Listen, I’ve also paid off my loans, but I want something better for my daughter and the next generation, and you should too.”

Her proposal would cost an estimated $1 trillion.

“Forgiveness of up to $50,000 in student debt is similar in price to the cumulative amount spent on Supplemental Security Income (SSI) and all housing assistance programs since 2000,” wrote Adam Looney, nonresident senior fellow at Brookings. “Even $10,000 in debt relief would require a remittance roughly the size of what the country has spent on public welfare (TANF) since 2000, and more than what has since been spent on feeding hungry schoolchildren in the United States Schools with high levels of poverty was spent through the school breakfast and lunch program.”

With student loan payments scheduled to resume in September, the Biden administration has not yet made a decision on debt relief or any other postponement of the payment freeze. Cody Hounanian, executive director of the Student Debt Crisis Center, explains why he’s optimistic about student debt relief.

“Whenever you cancel someone’s debt, someone has to bear that cost and it will be the Treasury. And that’s out of the question. But you have to weigh that against the social cost of those very high failure rates,” said Kathleen Engel, a professor at Suffolk University.

She says she advocates debt relief of up to $10,000 per borrower.

“Because what we do know is that the people who go bankrupt are mostly people who have little debt and went to schools that didn’t offer any solid education programs, so people can’t get good jobs after that,” Engel said. “Or the programs have cheated them in different ways and they can’t get credit for the courses they’ve taken, a number of things like that. What I worry about is that people can’t even get on the floor because they have this guilt.”

She says unequal access to information has contributed to the problem of student loan defaults.

“These intermediaries, the servicers, have really failed the borrowers and, in turn, failed the country,” Engel said.

Emy Takinami wants all student debt to be eliminated.

“I have student debt,” she said. “I come from a first-generation, working-class immigrant family.”

Plans to forgive $10,000 in student debt will not cover all borrower debt. But the pause has been helpful to a very small percentage, who have continued to pay off their loans during the pause — with those payments being entirely on the principal balance. CNBC’s Sharon Epperson explained.

She serves on the advisory board of Zero Debt Massachusetts and says her experience as a college access counselor for first-generation, low-income students influenced her views.

“The system and structure of our higher education is not designed to support first-generation students and thrive, especially the way higher education is funded,” she said. “All I saw was that a lot of students had to drop out, take a break, and go to schools they didn’t care about because they couldn’t afford to pay the price for the schools they wanted to go to.”

Takinami received a bachelor’s and master’s degree in social work. She says the pause in student loan payments has brought some economic relief, but ending it without student loan forgiveness would impact future economic decisions.

“It’s definitely impacted our own ability to think ahead in the future and try to save money to buy a house, have kids and all that,” she said. “I think the pause has allowed borrowers to do so much and it’s almost a taste of what debt relief will look like.”

The Massachusetts Attorney General’s Office has a Student Loan Assistance Division that answers questions and provides resources for people who are struggling to afford student loans.

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