HOUSTON – Federal student loan borrowers may receive some reprieve this month once President-elect Joe Biden takes office.
Daisy Bordeau is a managing partner at Allison Funeral Service in Liberty. Bordeau is putting her undergraduate degree in mortuary science to work as the number of people needing burial has spiked due to COVID-19.
“I do have student loan debt. I’ve got it paid down,” Bordeau said. “I think I’m at about $12,000 or $13,000. So, it’s a lot better than the $20,000 I was at a year ago.”
Bordeau said while she has made a dent in her debt. She also took advantage of the break-in monthly payments. She is not alone. Less than 11% of people with federal student loans are repaying them during the pandemic, according to CNBC. That works out to 4.6 million of 42 million borrowers.
Americans as a collective have about $1.7 trillion in student loan debt with the average 2019 graduate carrying a $28,950 balance, according to the Federal Reserve.
The Trump Administration in March paused student loan interest from accruing due to the pandemic.
“It’s been nice to just not have to make that payment because even though I have kept my job there are still other more expenses that have occurred in the time that we have here,” Bordeau said.
President-elect Biden, on day one, plans to ask the Education Department to offer an extension to borrowers. Unless that happens, the student loan interest is set to resume on Feb. 1. The incoming president is also considering erasing $10,000 in federal student loan debt per person, which has sparked controversy.
Jorge Barrio, a Fellow in Public Finance with Rice University’s Baker Institute for Public Policy, said such student loan debt erasure won’t have much of a positive impact on the economy.
“I would say that it’s probably not going to help the economy if you’re looking at ways to stimulate the economy, ways to come out of the current recession or the economic results of the coronavirus,” Barrio said.
Barrio said it would also be unfair to those who’ve already paid off their college debt. He said borrowers in higher income households may unfairly benefit more than those in lower incomes households if they’re on an income-based repayment plan.
“The policy itself of very regressive,” Barrio said. “It really, again, disproportionately benefits higher income households relative to low income households. And to the extent that it does that, it may worsen some issues like income and wealth equality in the United States.”
Bordeau said she sees both sides of the argument but thinks borrowers who have used their degrees to help the country during the pandemic should receive consideration for some sort of forgiveness.
“I agreed to that. I 100% agreed to take out that loan to pay it back. On the same hand though … the pandemic has changed my feelings on it,” Bordeau said. “We’ve been out there on the frontlines. We’ve been working, while there have been people that chose not to go back to work when they could have because they were getting money from the government to not go back to work.”