Before the current deadline of August 31st, some experts think the Biden administration may decide this week whether to continue the more than two-year moratorium on federal student loan debt. The Education Department is expected to offer up to $10,000 in loan forgiveness, and many borrowers are expecting that this break would be extended.
Approximately 44 million borrowers are currently saddled with a combined $1.7 trillion in federal student loan debt.
However, according to a recent poll, Americans are concerned that debt forgiveness may have unexpected repercussions.
According to a recent CNBC study, conducted online by Momentive from August 4 to August 15 among a nationwide sample of 5,142 adults, 59% of Americans are afraid that student loan forgiveness may worsen inflation, which is already a problem.
However, many borrowers may find that the worry that erasing student debt will give them more money to spend and so increase inflation is unfounded. Some claim that even if their student loan debt, or a portion of it, was forgiven, they would not alter their spending patterns. Additionally, during the payment pause, few adjustments were made by others.
Malcolm Newman has a bachelor’s degree in environmental science from Drexel University and works at The Academy of Natural Sciences in Philadelphia. He said that while the federal student loan repayment moratorium was in effect, he, now 26 years old, had been repaying private student loans.
“I haven’t really altered my spending habits. You know when those payments kick back in, I’ll have a little bit less than what I’ve been used to,” he said. “But it’s nothing that’s going to, you know, put me under or get me evicted from my house.”
According to a CNBC survey, 53% of Americans said they would pay off other debt if forgiveness returned more money to their monthly budget, and 45% said they would use that money toward saving for retirement.
Regarding student loan forgiveness, Americans are divided
According to the survey, 30% of all adults believe that no one should be exempt from paying down college loans.
However, there are noticeable differences between those who share this opinion. Only 22% of women concur with the view that no loans should be forgiven, which is supported by 39% of males. Only 19% of persons between the ages of 18 and 34 believe that no loans should be forgiven, compared to 39% of adults over the age of 65.
In contrast, 32% of respondents support forgiving student loan debt for everyone, while 34% believe that only those in need should receive loan forgiveness.
Tonya Edmonds is an artist and administrative assistant who graduated from Sarah Lawrence College with a master’s degree and Temple University with a bachelor’s degree. She currently owes school loans totaling more than six figures.
“I think there should be forgiveness because the majority of the time unless you start out with a job that is a high-paying job you can’t afford to pay,” she said.
“I’m not a doctor, I’m not a lawyer, I can’t, you know, pay the $100,000 or even the portion,” Edmonds said. “They always ask for a portion that is too big, like the minimum amount for them is always more than I can afford. So it’s just overwhelming.”
According to the Department of Education, under President Joe Biden’s administration, approximately $32 billion in loan relief has been authorized so far, and new regulations are being developed to permanently enhance some of the current student loan forgiveness programs.
With two degrees in communications and almost $100,000 in student loans, Kate Bernyk graduated from graduate school. Early in her career, she worked for the government, and most recently she applied to have her federal loans forgiven through the government’s Public Service Loan Forgiveness Program.
She was first demoralized by the procedure, but she has since learned that she has fulfilled the standards for having her debt erased. Bernyk isn’t feeling overly enthusiastic yet, though. She stated that she is awaiting a formal letter outlining the terms. “I’m not celebrating until I get that.”