Advocates are sounding the alarm on another potential financial cliff approaching in the New Year: the student loan debt crisis, now up to $1.7 trillion since the government program began in 1958.
Many borrowers were temporarily relieved of repayments during the pandemic, but they are set to resume on February first.
And while the Biden administration has made sweeping changes to the Public Service Loan Forgiveness program, a federal student loan forgiveness program — there’s still no movement to cancel student debt.
Changes to the program will allow eligible borrowers with federal loans who make 120 monthly on-time payments while working full-time to have the remainder of their balance forgiven. But, Cody Hounanian, Executive Director at the Student Debt Crisis Center, said some borrowers were ineligible for the program, adding more inconsistencies to the federal loan system.
“Our belief is that we need to cancel student loan debt for millions of Americans and not just those in certain jobs, “he said. “We need to list the burden, and we really need to just wipe the slate clean because this is a broken dysfunctional system. It’s not working as intended and we can’t make American families and people across the country carry the burden of what was a failed policy from the get-go.”
Hounanian echoes 89% of loan borrowers who believe they will be financially impacted when loan payments resume. That’s according to a survey from the Student Debt Crisis Center.
Another finding suggests that Black loan borrowers are the most impacted by the student debt crisis.
“We see that brown and Black students have to borrow more to go to school in many cases. Like, in the case of Black women. They actually attend graduate programs with higher [tuition]. And, so, what we see is that Black and brown students are doing more to achieve higher levels of education, taking on more debt and frankly not getting the type of economic gains and benefits that their education was supposed to provide them.” Hounanian said “Black and brown borrowers are particularly impacted. And unfortunately, those communities are the same communities that are carrying the brunt of the impact caused by the pandemic as well.”
Hounanian said student loan debt has impacted millions of lives, preventing them from supporting their families and achieving the American dream. He also called the crisis a “social ill” that must be addressed with achievable solutions, such as the cancellation of student debt.
But before that becomes a reality, Hounanian offered some recommendations to borrowers.
“[Loan borrowers] should go to the Department of Education’s website. They should speak to their loan servicer. They should contact nonprofits like the Student Debt Crisis Center and make sure that they understand what’s happening and how they are going to be impacted and what actions they can take to best set up for their personal financial situation,” he said.