Petition for Biden To Cancel Student Debt Garners 1M Signatures
As the total US student debt has exceeded $1.8 trillion, more than a million people have signed an online petition, relying on President Biden’s statement during his campaign trail to forgive some of the student debt piling up.
The numbers disclosed in the petition are more than worrisome: Of almost 45.4 million people who took a student loan, approximately 80% were unable to pay it back, even before the pandemic.
Due to outstanding student debt taken in 2004, default rates stand at 40%, even though students in 2004 took much less money than students these days have to take to cover their studying expenses. By the same metric, the current borrowers’ rate is expected to exceed 75%, which is approximately four times the default rate of subprime home mortgages.
As more and more people visit job posting sites since the COVID-19 struck, the need for a permanent solution to ever-growing student debt is becoming evident.
There were several attempts to remedy the effect the pandemic had on student loan borrowers. The CARES Act, which granted people a break from their payments until September 2020, was helpful, but not nearly enough, as shown by the call from House Democrats, which, under the HEROES Act, asks to prolong the pause in payments for another year.
Biden relied on forgiving student loans in his election campaign. The last month’s news of him asking his Education Secretary to see whether he can legally cancel up to either $10,000 or $50,000 of student debt stirred new hopes, but the main question remains: Is the president able to take action independently and cancel student debt without legislation?
It is safe to say that Democrats still hold a fragile majority in Congress, and many wonder whether it would agree to forgive the loans even if it came to it. A. Wayne Johnson, former COO of the Office of Federal Student Aid under Trump’s government, asked for student loan forgiveness of $50,000 per borrower.
However, the creators of the petition say there is no political background to it and that most borrowers identify as politically independent.
While some argue that canceling student debt would be unfair to those who budgeted and paid off their debt or never took loans in the first place, it is painfully apparent that $1.8 trillion in outstanding debt is a problem that demands some solution.
The other side to the argument is the claim that forgiving student debt would be stimulating for the economy. It would increase the borrowing capacity of a vast number of people, who are likely to use the money for buying homes instead of paying off student debt. This money would also benefit up-and-coming entrepreneurs who are currently either getting into more debt or having to rely on alternative funding methods, such as crowdfunding, to kick-start their businesses.
This petition seems to be only the beginning of a movement toward forgiving student loans. It is unlikely to subside, as other supporters, borrowers, and politicians are starting to support this movement and advocate for the president to follow through on his promises to cancel student debt.
Julia A. is a writer at SmallBizGenius.net. With experience in both finance and marketing industries, she enjoys staying up to date with the current economic affairs and writing opinion pieces on the state of small businesses in America. As an avid reader, she spends most of her time poring over history books, fantasy novels, and old classics. Tech, finance, and marketing are her passions, and she’s a frequent contributor at various small business blogs.
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