What's Next for Student Loan Borrowers?

Student loan advocates are still hopeful, even though President Biden's COVID relief package didn't include student loan forgiveness.

Video Transcript

- Student loan forgiveness is not in the $1.9 trillion COVID relief package signed by President Joe Biden, but advocates are hopeful.

ASHLEY HARRINGTON: It can be very stressful, so many people to have this much debt, and for many to not be making any progress paying it down.

- The law does include a broad tax exemption that would cover the discharge of federal and private student debts through the end of 2025. Supporters of loan forgiveness are watching what's next. So are borrowers.

MARY BETH SMITH: My life trajectory was to be pursuing a theater career, and so when these shutdowns happened-- I mean, it's been very tough.

- Mary Beth Smith is a Broadway marketer and freelance director, her income tightly tied to New York's pandemic's shut down theaters, her loans not covered by a current federal pause for more than 20 million borrowers that ends in October.

MARY BETH SMITH: I still had student loans. So loan payments and accruing interest, all that was still intact for me once COVID shut everything down.

- Natalia Abrams of the advocacy group Student Debt Crisis says widespread debt cancellation could be a stimulus of its own.

NATALIA ABRAMS: The domino effect has been that when folks have high student debt payments-- $1,000, $2,000 per month-- they can't buy houses, they can't buy cars. They aren't able to make small purchases to help that small business out.

- Senate Majority Leader Chuck Schumer is among congressional Democrats pushing President Biden to eliminate up to $50,000 per borrower by executive order.

CHUCK SCHUMER: President Biden has taken some good steps in the direction of student debt, but we think he has to go much further.

- But Biden has signaled a preference for Congress to act, and for a $10,000 cap, framing a debate of 10 versus 50. Critics of loan forgiveness point to studies like a Goldman Sachs analysis that found forgiving $10,000 per borrower would add less than one tenth of a percent to US GDP. Others argue more cancellation than that could reward too many borrowers who don't need help.

Ashley Harrington of the Center for Responsible Lending says it could level the playing field for those who do, especially borrowers of color, who lean more on loans for their higher education.

ASHLEY HARRINGTON: There are so many Black and Brown families who make a middle class income but are unable to live a middle class lifestyle because of student debt is holding them back from doing all the things we'd associate with middle class. Buying a house, starting a business, saving for retirement.

- More than 45 million Americans carry student loan debt.