‘We are facing a student loan time bomb,’ Senator Warren says amid $50,000 forgiveness push

With the U.S. student loan payment hiatus set to end after September, Senator Elizabeth Warren (D-MA) continues to urge student loan issuance as a cure for a potentially catastrophic scenario.

If the October payment hiatus is lifted without a cancellation, “we will face a student loan time bomb that, if it explodes, could throw millions of families over financial cliffs,” Warren said during a town hall approved by the American Federation of Teachers on Tuesday was organized night.

“The average borrower will have to start paying back nearly $ 400 a month to the government instead of spending that money in our economy,” she added. “Student borrowers run the risk of experiencing exceptional financial hardship. If the student loan interest break ends on September 30th, people won’t know how much they owe. You will suddenly miss deadlines “will default. You will owe penalties for it”.

Government-sponsored student loan payments have been on hold since March 2020, and President Biden extended the hiatus to at least September 30 after taking office.

Screenshot of Warren during the AFT town hall

‘The time is now’

According to the New York Fed, student loan balances rose by $ 29 billion to $ 1.58 trillion in the first quarter.

At the same time, in the first quarter of 2021, only 6.2% of student loans were in serious default or default due to the payment pause and the debt collection moratorium.

(Source: New York Fed)

That staggering decline could be reversed, Warren argued, if payments were resumed without adequate education from the borrower and widespread cancellation.

“So the time is now, let’s solve this now,” Warren said. “We need to cancel $ 50,000 debt today, which will make 84% of the people out there pay off all student loan debt, and then we can focus on the remaining 16%. We need to do this now before there is any surge in default once those loans are paid back. So that’s one of the reasons this moment is so urgent. “

The story goes on

The Washington Post reported last week that White House officials are not including student debt relief in their upcoming budget.

In March, White House Chief of Staff Ron Klain told Politico that President Biden had asked Education Secretary Miguel Cardona to write a memo on whether the president has legal authority to exempt $ 50,000 in student loan debt by executive order. The Department of Education did not respond to requests for comments on the memo.

“Shedding $ 50,000 in student loan debt would be the most effective executive action President Biden could take to give our economy a massive consumer-centric boost and promote real racial justice across our nation,” Warren said. “Department of Education data shows that 84% of borrowers – that’s 36 million people – would wipe out their student loans completely if we waived $ 50,000 in student loans.”

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Aarthi is a reporter for Yahoo Finance. Follow her on Twitter @aarthiswami.

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source https://collegeeducationnewsllc.com/we-are-facing-a-student-loan-time-bomb-senator-warren-says-amid-50000-forgiveness-push/