Borrowers are on edge as Biden decides how to act on student loan forgiveness

At the pump, in the supermarket, with his landlord — all of Ryan Tucholski’s bills are going up lately.

But there’s one expense he hopes will soon go down or maybe even disappear: his monthly student loan payment.

Like millions of other people who borrowed for their education, Tucholski is eagerly awaiting to hear how the Biden administration will address the country’s collective $1.7 trillion outstanding student loan balance.

A freeze on payments for more than two years (due to a pandemic-era relief policy that remains in effect), growing criticism about the lending system and consumer pain from steep inflation have all escalated the pressure on President Joe Biden to act. The president said recently he’d make an announcement on possibly relieving some of the debt within weeks.

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“Nobody likes the limbo,” said Tucholski, 41, who runs a professional trade association in central Florida.

It took Tucholski several years to start earning enough to begin repaying his student loans after he graduated from the University of Toledo in 2003. In the meantime, he enrolled in multiple deferments with the government and the interest on his debt piled up. Although he’s already paid back the $18,000 that he borrowed to get his bachelor’s degree in English, his balance today is more than $24,000.

“I’m not asking for a handout,” he said. “Something is just not working with these loans.

“If this were a mortgage, there would be hearings in Congress about it.”

There’s no example in U.S. history of the kind of sweeping debt forgiveness that the White House is currently considering delivering, although consumer advocates point out that large corporations and banks have been bailed out by the government from their own crises.

Proponents of a student debt jubilee also argue that the erosion of public funding for higher education alongside skyrocketing attendance costs has essentially forced families to turn to loans to send their children to college, an increasingly necessary step to reach the middle class.

The median annual income for high school graduates is around $38,000, compared with closer to $79,000 for college graduates, according to an analysis by education expert Mark Kantrowitz. Critics of debt cancellation, though, say it’s these higher earnings that show college graduates don’t need the relief.

The lack of precedent, high price tag and political calculations for forgiving the country’s outstanding education debt, which has nearly doubled over the last decade, likely explains why the Biden administration hasn’t decided what to do.

Among its biggest uncertainties is how much of the debt to cancel.

On the campaign train, Biden said he was in support of clearing $10,000 for all, but there’s now concern that an announcement with that amount will cause more frustration and disappointment than anything else. The average student loan balance is three times that, at around $30,000. More than 3 million borrowers, mostly graduate students, owe north of $100,000.

“For 83% of Black borrowers, canceling $10,000 of debt still leaves them with a balance higher than their original amount,” said Astra Taylor, co-founder of The Debt Collective, a union for debtors. “That is unacceptable.”

The NAACP agrees. Wisdom Cole, national director of the association’s youth and college division, recently said on Twitter that nixing just $10,000 would be “a slap in the face,” and called on the president to wipe out at least $50,000.

The White House’s decision will determine the shape of the future for tens of millions of Americans. Research shows student debt can make it more challenging for borrowers to start businesses, save for retirement, have children and become homeowners.

“Student debt is crushing borrowers at nearly all stages of their lives,” said Persis Yu, policy director for the Student Borrower Protection Center.

Debt cancellation is necessary after “decades of mismanagement, abusive practices and general incompetence” in the student loan system, Yu added. Roughly a quarter of loan holders — or 10 million people — were estimated to be in delinquency or default prior to the pandemic.

While the Biden administration deliberates on how to proceed, borrower Nicole Cueto obsessively refreshes her news feed, waiting for word. She owes more than $100,000 in student loans, and was recently denied for a mortgage because her debt-to-income ratio was too high.

“It was really sad,” said Cueto, 39, who works as a publicist in Manhattan in New York City. She’s lived in five different apartments already, and expects rising costs will force her to pack up again soon.

“I’m tired of moving,” she said. “If I was a homeowner, at least I could rely on what my monthly payments would be.”

What’s more, if a portion or all of her debt is canceled, she said, “my future could be something I look forward to.”