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Student loan repayment extension doesn't go far enough, Rep. Pressley argues

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Representative Ayanna Pressley (D-MA) does not believe that the recent extension of the federal student loan payment pause to January 2022 goes far enough to address the student debt crisis.

Speaking on Yahoo Finance Live (video above), Pressley argued that the Biden administration should also cancel student loan debt to prevent borrowers from being financially strapped when the bills come due in February.

"We organized and fought to extend the pause on student loan payments — myself, Senator [Elizabeth] Warren, and [Senate Majority] Leader [Chuck] Schumer," Pressley said. "And now we have to go further and that is to cancel student debt up to $50,000 with the same authority that President Biden used to extend the pause on payments, to cancel student debt by executive action with the stroke of a pen and mitigate this hurt."

The trio of prominent Democrats has repeatedly urged President Biden to use executive authority to enact broad student loan forgiveness for the roughly 45 million borrowers with federally-backed debt.

However, not all Democrats are in agreement when it comes to student loan cancellation.

House Speaker Nancy Pelosi recent asserted that forgiveness would have to come from "an act of Congress," providing a talking point for Republicans who feel the same way.

One of Biden's campaign promises involved cancelling $10,000 in federally-backed student loan debt for all borrowers, but the former longtime Democratic senator is also skeptical about enacting broad-based cancellation of up to $50,000 in student loan debt via executive action (as opposed to legislation passed by Congress).

In response to Pelosi's surprise divergence, 80 progressive organizations wrote to Pelosi to say they were "discouraged" to hear those words.

"Legal scholars have well documented that the Secretary of Education has clear authority to cancel federal student debt through the Higher Education Act," the organizations stated. "Further, President Trump and President Biden (for a second time most recently as last week) both cancelled federal student loan debt with the federal student loan payment pause."

Representative Ayanna Pressley (D-MA) discussed student loans on Yahoo Finance Live.
Representative Ayanna Pressley (D-MA) discussed student loans on Yahoo Finance Live.

76-year-olds 'still paying off student loans'

Federal actions amid the pandemic will lead to roughly $100 billion in total student loan forgiveness between March 2020 and September 2021.

A notable number of student loan borrowers who have benefited are above the age of 50. Pressley noted that when she visited a senior community in her district recently, student debt cancellation "was one of the first issues that they asked me about." She added that there were "constituents in my district that are 76 years old [and] still paying off student loans."

(New York Fed)
(New York Fed)

Pressley also stressed the stark gap between white borrowers and borrowers of color.

"Student debt disproportionately falls on the shoulders of Black and Brown borrowers, and it has created the racial wealth gap," she said. "Higher education was supposed to close the racial wealth gap, but that's not true for Black Americans."

Black borrowers on average borrow more and default at higher rates, according to NY Fed researchers. Using data based on borrowers’ location and racial group from the U.S. Census Bureau’s American Community Survey, the NY Fed found that borrowers living in Black-majority areas were the hardest hit by the student debt crisis in terms of carrying heavy balances and defaulting on loans.

"It is a racial justice issue," Pressley said. "Because of draconian discriminatory policies like redlining, Black families did not have the same opportunity to build generational wealth, which is why this burden has fallen disproportionately on Black and Brown student borrowers."

Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

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