‘Tick tock, tick tock, Mr President’: Democrats call on Biden to extend student loan repayment pause and cancel some debt

Senate and House Democrats are calling on President Joe Biden to extend the pause on student loan repayments and cancel a large portion of student debt.

Senate Majority Leader Chuck Schumer of New York, Senator Elizabeth Warren, and Representative Ayanna Pressley, both of Massachusetts, said on Tuesday that failing to extend the pause on student-loan payments and collections could slow the economic recovery.

The pause on repayments is set to expire on 30 September. Payments were paused by the Trump administration at the start of the coronavirus pandemic, a move that was extended by President Biden to the current date through an executive order he signed on his first day in office.

“Covid created severe hardship for some, and threw many others off their stride,” Mr Schumer said during a press conference. “To make borrowers repay their debts now, would be unfair, would be harsh, and in many instances would be cruel.”

Ms Warren said: “We’re here today to say: Tick tock, tick tock, Mr. President. Millions of Americans ask you now to pick up a pen and cancel student loan debt. To pick up a pen and extend the payment pause.”

A group of legislators has already written to the president asking him to extend the pause until at least 31 March 2022.

Ms Warren is particularly passionate about eliminating student loan debt – it was a major issue for her in her 2020 presidential primary campaign.

Both Senator Warren and Senator Schumer have also been holding press events for almost nine months calling on Mr Biden to cancel up to $50,000 student debt. The president remains skeptical of the idea.

In a recent conversation with MassLive she said of the two proposals: “If they do both of those things, that will completely eliminate student loan debt for 85 per cent of the people who currently carry it.”

She added: “And for the 15 per cent of people who remain, it gives the Department of Education a chance to get them into the right repayment programs.”

Ms Warren says that eliminating debt at the $50,000 level is right because it “maximises racial justice and closes the racial wealth gap the most”.

“It would help nearly everyone who tried to go to college and it didn’t work out – the 40 per cent of student loan borrowers who do not have a college diploma and are truly struggling hard with student loan debt and would help a huge number of public school teachers and firefighters and people who want a chance to get out there and start their own businesses,” she says.

“It’s the right number, it’s where a lot of people intersect that we could transform an entire generation.”

There is a distinct racial disparity in the default rate. Black and brown borrowers have the most difficulty with loan repayments while facing lower wages, less support from family, or having dropped out before finishing their degree.

By forgiving $50,000 in student loan debt, approximately 36 million Americans would be entirely debt-free – including 9.4 million currently in default.

The Biden administration has proposed possibly cancelling $10,000 for each American with student loan debt. This would wipe out the debts of 15 million borrowers. The president is so far undecided as to whether he should take direct action or leave the proposal to Congress.

Ms Warren described that proposal as “better than nothing” but not enough to “help people who are struggling”, and “not enough to get the economic pop that we need”.

The senator believes that forgiving a larger amount of debt would give a significant boost to the national economy.