Student loan debt solutions for Biden’s first 100 days
President-elect Joe Biden will be sworn in as the 46th President of the United States on Jan. 20, 2021.
Biden, like those who came before him, will set an aggressive agenda for the first 100 days. Within that window, he will be looking to accomplish at least one landmark achievement to temporarily satisfy the toughest employer out there — the American voter.
It is very likely this achievement comes in the form of a policy to help solve the nation’s worsening student loan debt crisis.
Why?
First, just take a look at the figures. The country has an outstanding student loan debt balance of $1.7 trillion, which makes it the second largest form of consumer debt behind only that from mortgages.
According to LendEDU, the average student loan borrower from the Class of 2019 owes $29,076 in student loan debt. In Connecticut, the average borrower from that class owes a whopping $41,579, the highest figure in the country.
How will these young Americans move forward after college with such a financial burden?
Second, it’s an issue that is being taken seriously by members of both parties. Don’t forget, it was President Donald Trump who signed an executive order in August to continue student loan pandemic forbearance.
And recently, his Secretary of Education, Betsy DeVos, extended the relief into January so as to leave it to the incoming administration to make the next move.
The vast majority of young voters, of which there are many, have student loan debt and neither party wants to alienate themselves from that voting bloc by having the harsher student loan debt platform.
This means President-elect Biden will likely have his best chance at a significant 100-day policy victory with bipartisan student loan debt reform. He can get something through both legislative bodies and to the Resolute Desk in the short 100-day time frame.
But, it has to make sense. Forgiving all $1.7 trillion worth of student loan debt not only makes little sense, it’s truly unfair to all those who worked hard to repay their own student loans.
Here are a few, bipartisan student loan debt solutions for President-elect Biden to consider.
First, the student loan pandemic forbearance for all federal student loans should be extended until January 2022.
Even with a vaccine in the pipeline, the pandemic and social distancing guidelines will likely still be impacting our lives well into the spring, which means the economic recovery will continue to be agonizingly slow for many Americans who are out of work.
This recession isn’t going anywhere anytime soon so struggling student loan borrowers will continue to need the financial reprieve that pandemic forbearance offers them.
On top of that, borrowers who have been able to continue making student loan payments are rapidly chipping away at their debt balances because with interest rates frozen at zero, 100 percent of the payments are going toward the principal.
Second, all federal student loans that were used to pay college costs related to the Spring 2020 semester should be completely forgiven.
When campuses across the country were shut down to combat the spread of the virus, college students were robbed of the full college experience that they took out federal loans for.
They did not have access to state-of-the-art facilities and world-class educators. Instead, they took online Zoom classes from their beds and kitchen tables. Their college costs for that semester should more accurately reflect the latter, not the former.
By forgiving federal student loans taken out for just that semester, President-elect Biden can do right by these students because their loan balances will be more in line with the educational value they received.
Third, the root of the student loan debt crisis, the colleges and universities, must finally be held accountable by the federal government.
When a student has federal student loan debt, they don’t owe the school money, they owe the government money because the government has already paid the school. The same goes for private student loans, except the government is swapped out for a private lender.
This system has given us the student loan debt crisis because colleges have been able to raise tuition to outrageous levels with no fear of not getting paid. The students then must take out more and more student loan debt to meet those obscene tuitions.
So, the government and students are left in a lurch, while the colleges and universities line those endowment funds.
If the system is to remain, a system of government accountability must be created where colleges and universities are punished if they develop a history of high student loan debt and default figures.
One form of punishment handed down to the schools from the government would involve forcing applicable institutions to become equal partners in repayment with the borrowers that took out student loans to attend those schools. If they don’t comply with that, the federal government can simply freeze funding to those schools or even not provide federal student loans to students to attend those schools.
It’s my prediction that colleges and universities would speedily drop tuition to avoid high debt and default figures if President-elect Biden signs such a policy into law within his first 100 days.
In Connecticut, the average borrower from the Class of 2019 owes a whopping $41,579, the highest figure in the country.