Lev Radin/Sipa USA via AP Images
Sen. Chuck Schumer (D-NY) speaks about a plan to cancel student debt, April 16, 2021, at Hunter College in New York.
As one of the first kids from his church to go to college, Tamar Wilson wanted to make it count. At 18, he figured the higher price tag at Pace University—where he ended up for three years before his partial scholarship unexpectedly ended—equated to a better job after graduation. For him, Pace meant upward mobility and greater financial security.
But $140,000 of student debt later, he now knows those beliefs were misguided.
Wilson, who is now 33 and lives in Philadelphia, has the same sinking feeling every morning when he wakes up and every night when he goes to bed: He’s neck-deep in student debt, and he isn’t coming out of it anytime soon. His debt is paralyzing, impacting every aspect of his life; it strains his mental health, familial and romantic relationships, and self-confidence.
“When I wake up, my student loans are the first thing on my mind,” he says. “Good morning, you have student loans.” This anxiety was temporarily interrupted during the pandemic. The federal moratorium on student loan payments over the last 14 months was a godsend, Wilson told me. But the end of that moratorium is fast approaching, filling Wilson and millions of other borrowers with dread.
Through interviews with nearly a dozen student loan borrowers, it’s clear how much student debt weighs on Americans. Currently, 45 million people owe $1.7 trillion in student debt, and the average monthly payment is $393. Student loans are one of the greatest debts of any type in the country, surpassing national credit card and auto debt. A few borrowers told me that they expect to die with their student loans.
Student loan borrowers often see debt as an investment. Fresh out of high school, they think attending college will surely enable them to pay off their loans soon after graduation. Many of the people I spoke to had grown up in poverty, their parents living paycheck to paycheck. As first-generation college students, they had no one to turn to for financial guidance. At age 18, they were making one of the most consequential financial decisions of their lives, on their own.
The burden of student debt isn’t equal across borrowers; it disproportionately impacts Black Americans, making it one of the key mechanisms exacerbating systemic economic inequality. On average, Black borrowers owe $25,000 more in student loans than their white counterparts.
Currently, 45 million people owe $1.7 trillion in student debt, and the average monthly payment is $393.
The temporary pause on loan payments and accrual of interest, first instated at the beginning of the pandemic, provided a moment of much-needed relief. The moratorium was initially set to expire in March, but President Biden extended it to the end of September on one of his first days in office. Since then, there’s been silence. Without action, billions of dollars in monthly payments will come due in September.
Without monthly loan payments, Wilson was able to provide financial assistance to his twin sister. At the beginning of the pandemic, her hours at a blood plasma donation center were cut off. Wilson’s financial help was critical; as a single mother with a young son, his sister couldn’t have made ends meet otherwise.
On the other side of the country, Richelle Brooks, a 33-year-old educator in Long Beach, California, was able to focus her time thanks to the moratorium. For 15 years, Brooks stayed in school part-time to avoid paying back student loans. (Loan payments don’t begin until six months after graduation.) In the last year, without the threat of student loan payments, she could exclusively focus on her career. As a result, she was offered a position as a principal at a magnet school last month.
“If Biden doesn’t cancel the student loan debt, my only option is to go back to school,” Brooks says.
Other borrowers were able to assiduously save up. Thirty-nine-year-old John Edgar Mihelic, along with his wife, took the opportunity of the moratorium year to save as much money as possible. Together, they were able to save up enough to entirely pay off their $30,000 in student loans.
“What debt does is constrain,” Mihelic says. “We have been married since 2008 and have never gone on a real vacation. When you have monthly payments, it hangs over you and limits what you can do. Part of why we’ve never really entertained having children is the cost of child care when you have other costs already.”
During his campaign, Biden committed to $10,000 of immediate relief, but only through congressional action.
Although federal student loan payments were first paused because of the pandemic, Seth Frotman, executive director of the Student Borrower Protection Center, says there are now bigger, more systemic concerns. He says the loan relief programs already in place—like the income payment plan or Public Service Loan Forgiveness program—are effectively defunct. (From November 2020 to April of this year, the Education Department denied 98 percent of borrowers who applied for the Public Service Loan Forgiveness program and met employment certification.)
“The day that payments turn on is barreling towards us,” Frotman says. “And I don’t know how in good conscience the Department of Education throws back millions of people into such a broken system.”
The administration does have options. While Biden’s Education Department got off to a slow start on reforming borrower relief programs, student loan advocacy groups cheered when he appointed Richard Cordray, formerly in charge of the Consumer Financial Protection Bureau, as chief of federal student loan programs. Cordray has a record of protecting borrowers, and he could be part of the department’s enabling of more loan forgiveness and fixing current systems, while cracking down on unscrupulous student loan companies that often deny borrowers relief to which they’re entitled.
The administration could also extend the moratorium, or bring it back with a phased restart, only requiring a portion of payments to start. And of course, they could cancel the debt, a legal recourse under the Higher Education Act that doesn’t require additional legislation.
“We are facing a student loan time bomb that, when it explodes on September 30, could throw millions of families over a financial cliff,” Sen. Elizabeth Warren (D-MA), an early supporter of student debt cancellation, told the Prospect. “The time is now for President Biden to use his authority to cancel $50,000 of student debt today to stop the spike in defaults once they’re turned back on.”
During his campaign, Biden committed to a more modest $10,000 of immediate relief, but only through congressional action, which in a 60-vote Senate dooms it to failure. In April, Biden asked Education Secretary Miguel Cardona to look into the legality of mass cancellation through executive action, and later sought a legal opinion from the Justice Department. Studies and reports are the kind of thing that happens in Washington when someone doesn’t want to take action.
That said, pressure on loan cancellation is mounting. Earlier this week, the Debt Collective took the initiative of writing its own executive order for Biden—they say all he has to do is sign it. Sens. Chuck Schumer (D-NY) and Warren have continued to push him on mass cancellation. Both senators, along with other progressive colleagues, have flooded Twitter with the hashtag “#CancelStudentDebt.” Warren ominously tweeted last week: “The clock is ticking.”
Advocacy groups are hopeful there might be movement soon. On Tuesday, it appeared the Department of Education had deleted a memo from former principal deputy general counsel Reed Rubinstein, which argued the secretary of education didn’t have the power to cancel student debt. It could be a sign the administration is gearing up for an announcement, or at least that the department’s own legal opinion will be released soon.
As the moratorium’s expiration date nears, what at first felt like a blessing has morphed into a nightmare. “It’s kind of like torture,” says Brooks. “At any moment this could come to an end, and then what are you going to do? The psychological turmoil of a moratorium without any explanation as to what comes next is twisted.”
For student borrowers, an extension of the moratorium—or ideally, mass cancellation paired with systemic reform—can’t come soon enough.
“We were told that education was the key to success,” Wilson says. “Lo and behold, it’s actually financial servitude.”
