Begun under the Trump administration in March 2020 in response to the COVID-19 pandemic, the Federal Student Loan payment pause allowed borrowers to stop making payments on their federal student loans without penalty. The payment pause was extended by the Biden administration several times, but widespread cancellation was halted by the conservative Supreme Court.
The end of the payment pause will have a significant impact on borrowers and is expected to lead to an increase in defaults on the some $1.75 trillion total debt from some 45.3 million borrowers.
Borrowers and their advocates continue to call for cancelling predatory government student loans, much the same way some 10.5 million Paycheck Protection Program (PPP) loans were forgiven. “The PPP program seems to have resulted in billions of dollars of fraudulent loans that have ultimately turned into grants,” Samuel Kruger, an assistant professor of finance at the University of Texas at Austin told NPR earlier this year.
Kruger co-authored a study “estimating that $64 billion of the nearly $800 billion in loans issued show signs of fraud, such as suspiciously high payrolls and multiple businesses listed at the same home address.” The average forgiven PPP loan ranged from $72-95,000. $800 billion is about half the total amount of outstanding student loans.
Small Business Administration data released in January revealed that 92% of PPP loans issued have been granted full or partial forgiveness, including loans to politicians such as members of Congress and their families, private companies with ultra-rich owners, and numerous celebrities in the entertainment and sports industries.
According to the Education Data Initiative, “The average federal student loan debt is $37,338 per borrower. Private student loan debt averages $54,921 per borrower. The average student borrows over $30,000 to pursue a bachelor’s degree. A total of 45.3 million borrowers have student loan debt; 92% of them have federal loan debt.”
Almost half of student loan borrowers (48.9%) are still paying off their loans 20 years later and half still owe $20,000 each, according to the Initiative. “The average overall student debt has increased by 106% or 6.6% each year over 16 years,” the Initiative found. “Those aged between 50 to 61 have the highest average student loan debt at $45,600,” and some 2.4 million people over 61 still owe $98 billion in total.
Most student loan debt belongs to women (64%), with Black women holding the highest average amount. Student debt holders with master’s degrees, including large number of K-12 teachers whose jobs require masters degrees, owe an average of $80,494, according to the Initiative.
Attending college has become considerably more expensive in the last 30 years. “Tuition costs at public four-year colleges grew from $4,160 to $10,740 and from $19,360 to $38,070 at private nonprofit institutions (adjusted for inflation),” according to Forbes magazine, “As costs have risen, so has the need for student loans and other forms of financial aid.”
The Debt Collective, who is advocating for the cancelling of student loans, argues that “The Department of Education has the power to cancel all of our federal student loans immediately through the Higher Education Act of 1965,” through the “compromise, settle, waive or release” clause of the Act. They have created a tool that creates a legal memo requesting the Education Department cancel individual federal student loans.
“Filing this appeal to the Department of Education will not harm you, nor will it negatively impact other relief channels you may be seeking, such as PSLF, borrower defense, false certification, closed school, total/permanent disability discharges, or alternate repayment programs like income-driven repayment,” according to the Collective. “In other words, you have nothing to lose by filling out this form, except possibly your immoral and illegitimate student loans.”
You can find the tool here.