Biden Extends Student Loan Relief For The Third Time

Despite having stated that the second period of loan payment relief, which was meant to end next February, would be the last for American university students, President Joe Biden recently announced that he will pause student loan repayments for a third time. This third relief period will last for a further 90 days (until May 1st).

President Biden received praise from much of his party for extending the repayment pause, but he has made it very clear that it is not something he wanted to do. Biden has stated on multiple occasions that the second loan relief extension was going to be the last. However, this decision was met with immense pressure from social media, along with the public criticism from more progressive members of his party, like Representative Alexandria Ocasio-Cortez. Out of presumable fear that the backlash would cause him to suffer in the midterm elections, Biden went back on his previous statement and ordered the third extension.

The pause on student loan repayment was first instated nearly two years ago, in May 2020, in order to help U.S. citizens with some of the physical and economic effects of the coronavirus pandemic. While this is a positive goal – “extending the pause will help millions of Americans make ends meet, especially as we overcome the Omicron variant” – the Biden administration is still looking for students to “transition smoothly” back to repayment soon. The extended relief period is also less helpful in the grand scheme of things than it may appear. When a university degree takes an average of 1095 days to complete, an extra 90 days of payment relief is not a lot, and given that COVID has been a problem for more than two years, it is unrealistic to think that the pandemic will no longer be an issue for the United States in 90 days’ time. This also doesn’t take into account the students whose loan payments aren’t covered in the pause.

While this loan “forgiveness” is a temporary fix for many, it will leave many others financially unstable while doing nothing to solve the issue at its roots. Student loans in the United States allow teenagers to borrow thousands of dollars without a real understanding of how they will repay them in the future, contributing to over 1.7 trillion dollars of debt. (Student loan debt is the second highest form of consumer debt in the United States.) Avoiding this debt can lead students to choose not to pursue higher education, but many of the higher-paid jobs in the United States require applicants to have a college degree, making social mobility for these young people unattainable.

Student loans also add to the racial wealth gap. The average African-American university and post-graduate student owes more than 100% of their loan balance, even 12 years after college, and experiences higher rates of inflation than their white peers. While student loans do successfully allow those with less money to pursue higher education, that money must be paid back with interest, making it more expensive for poor students to get a loan. In other words, these students have to pay the banks more than they had originally borrowed. This debt often grows too large to pay off, further adding to American students’ financial instability. Not only that, but starting your working life with thousands of dollars of debt can be incredibly detrimental. People with high debt are more likely to suffer from anxiety and depression.

There are currently 45 million American citizens in the United States with student loan debt. If just $10,000 of that debt were cancelled, over 15 million Americans would be newly debtless. Cancelling a further $50,000 dollars would completely wipe out the debt for more than 35 million Americans, with loan debt for the last 10 million reducing dramatically. Graduated students without student loan debt would be able to begin their adult lives without struggling under the debt’s immense impact, allowing for more money to be saved for retirement and increasing job and geographic mobility. Debt-free graduates would also be more likely to be able to create small businesses, start families, and form long-term personal relationships. The financial freedom would allow graduated students to worry less about paying off their loans, letting them invest in their communities and support small, local businesses. Cancelling student loan debt would massively stimulate the economy.

According to the Gatsby Curve, countries with a high level of income inequality show the least amount of social mobility, but despite being the home of the American Dream, the United States struggles more than many other countries with wealth inequality. After the announcement of the third extension, Senator Elizabeth Warren, Representative Ayanna Pressley, and Senate Majority Leader Chuck Schumer released a joint statement asking for President Biden to begin working towards the cancellation of up to $50,000 of debt for every American who has taken out a student loan. Unfortunately, President Biden has repeatedly stated that he is against this idea. During his presidential campaign, he committed to cancelling up to $10,000 for every American with student loan debt, but is yet to do so, claiming that the bill is still under review.

It has become increasingly obvious that the United States can do more for its students. In my opinion, all student debt in the country should be cancelled. With a complete cancellation of student debt, more Americans would be able to pursue higher education, get better paid jobs, and achieve the American Dream.

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