HOUSTON – The Biden Administration could make an announcement regarding federal student loans as early as Wednesday, according to NBC News.
NBC News is citing multiple sources that said President Joe Biden could extend the federal student loan moratorium for several months past the August 31 deadline and may forgive $10,000 for borrowers earning less than $125,000 a year. His administration has already wiped out $32 billion in debt for more than 1.6 million Americans.
The Federal Reserve estimates Americans owed $1.7 trillion in student loans in the second quarter of 2022. Federal student loan payments have been on pause without interest since March 13, 2020.
Samantha Solis, a graduate of Houston Baptist University, said not having to pay interest on her federal student loans during that time has been a relief.
“It was actually pretty awesome because I was able to take the federal loan payment and put it towards my private loans, which allowed me to actually pay off one of the private loans completely,” she said. Solis graduated from HBU with $112 thousand in federal and private loans. She said she’ll be able to attack that debt quicker should the student loan moratorium extension and debt cancellation come to fruition.
Eric Blacher, a family physician with Houston Methodist Hospital, said he and his educator wife are saddled with student loan debt.
“Between the two of us, were looking at close to $600,000 when all said and done, even after public repayment service programs,” Blacher said.
The family physician said should the Biden Administration decide to forgive $10,000 in student loan debt, neither he nor his wife would qualify. He said his income exceeds the threshold and his wife refinanced her federal loans with a private company during the pandemic.
Blacher said they are repaying $60,000 annually in student loans, but the money is going to interest rather than the principle.
“I still find myself spinning my wheels tremendously even with both of our incomes,” he said. “It’s been quite a challenge. I can’t imagine folks who are single income under $125,000 how they’re making ends meet, especially with inflation, especially with the cost of housing rising.”
Blacher said he doesn’t think full loan cancellation is the solution.
“I don’t think it’s necessarily wise to wipe out everyone’s loans when there have been generations of people that have honored their responsibility and paid off their loans penny for penny,” Blacher said.
He said educating students about finances and taking out loans could be beneficial to students before they head off to college. He also said access to public repayment services programs would also be beneficial.
John Diamond, the Director of the Center for Public Finance at Rice University’s Baker Institute, said the types of student loan debt policies the White House is considering are bad for the economy and inflation rates.
“In fact, we would expect individuals would be incentivized to take on more debt with the hopes that they would do this again somewhere down the road,” he said. “Universities will have the incentive to raise tuition.