Some experts believe the Biden administration could announce a decision on whether to extend a more than two-year-long pause on federal student loan debt this week, ahead of the current Aug. 31 deadline. Many borrowers are hoping the Education Department will extend that break and announce up to $10,000 in loan forgiveness.
Currently, about 44 million borrowers owe a collective $1.7 trillion in federal student loan debt.
Yet, a new poll finds Americans worry that debt forgiveness could have unintended consequences.
Already battling higher prices, 59% of Americans are concerned that student loan forgiveness will make inflation worse, according to a new CNBC survey, conducted online by Momentive among a national sample of 5,142 adults from Aug. 4 to 15.
Still, the concern that canceling student debt would give borrowers more money to spend and therefore increase inflation may not hold true for many borrowers. Some say they would not change their spending habits if their college debt — or a portion of it — is canceled. Also, others haven’t made many changes during the payment pause.
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Malcolm Newman, who works at The Academy of Natural Sciences in Philadelphia, earned a bachelor’s degree in environmental science from Drexel University. Now 26, he said he’s been paying back private student loan debt during the moratorium on federal student loan repayment.
“I haven’t really altered my spending habits. You know when those payments kick back in, I’ll have a little bit less than what I’ve been used to,” he said. “But it’s nothing that’s going to, you know, put me under or get me evicted from my house.”
The CNBC survey found that 53% of adults polled say if forgiveness put extra money back in their monthly budget, they would pay off other loans, and 45% said they would save that money for retirement.
Americans are divided on student loan forgiveness
The survey found that 30% all adults say there should be no student loan forgiveness for anyone.
Yet there are sharp divides among those who hold this view. While 39% of men say no loans should be forgiven, just 22% of women agree with that statement. Only 19% of adults between 18 and 34 years old say no loans should be forgiven, versus 39% of those over 65.
Meanwhile, 34% of respondents say only those in need should have loans forgiven and 32% are in favor of loan forgiveness for all who have student debt.
‘The minimum … is always more than I can afford’
Tonya Edmonds, an artist and administrative assistant, earned a bachelor’s degree from Temple University and master’s degree from Sarah Lawrence College. She now owes more than six figures in student debt.
“I think there should be forgiveness because the majority of the time unless you start out with a job that is a high-paying job you can’t afford to pay,” she said.
“I’m not a doctor, I’m not a lawyer, I can’t, you know, pay the $100,000 or even the portion,” Edmonds said. “They always ask for a portion that is too big, like the minimum amount for them is always more than I can afford. So it’s just overwhelming.”
They always ask for a portion that is too big, like the minimum amount for them is always more than I can afford. So it’s just overwhelming.Tonya Edmondsstudent loan borrower
During President Joe Biden‘s tenure, the Department of Education says it has approved nearly $32 billion in loan relief so far and is working on new regulations to permanently improve some student loan forgiveness programs that are already in place.
Kate Bernyk finished graduate school with two communications degrees and about $100,000 in student debt. She worked in public service early in her career and recently applied to have her federal loans forgiven under the government’s Public Service Loan Forgiveness Program.
Initially, she was discouraged with the process, but since then has received confirmation that she has met the requirements to have her debt forgiven. Still, Bernyk’s not getting too excited yet. She’s waiting for an official letter stating the terms, she said. “I’m not celebrating until I get that.”