Contrary to popular belief, the United States is not the only country where student loans exist. But the ubiquity of student loans in the U.S. is somewhat unusual. Less than 20% of German students obtain student loans, for example. Things in the U.K. might be more relatable to American students; there, students rack up an average of $43,298 in debt, slightly above the average $39,351 owed by American students.
In theory, American college debts shouldn’t be hard to repay. Students who had the average loan debt and paid $393 per month would pay the full amount, plus nearly $8,000 in interest, in just ten years. But those ten years come when incomes are lowest: when grads are in fresh-out-of-college, entry level jobs. In 2020, starting salaries for graduate students hit an all-time high at an average of $55,260, but that’s an average, and $88,000 petroleum engineers are offset by teachers, who – despite sky-high demand – start at an abysmal $38,617.
That means the average teacher ($38,617) with the average student loan debt ($39,351) at the average interest rate (3.73%) would need to fork out 12% of their pre-tax income to pay their student loans off in ten years.
Joe Biden is the only president in history where no one’s paid on their student loans for the entirety of his presidency.White House Chief of Staff Ron Klain
That’s obviously not going to work, and the federal government knows it. That’s why programs like income-based repayment exist, allowing people who took on significant debt but who work in lower-income sectors to have outstanding debt forgiven after 20-25 years of payments. For those who qualify for public service loan forgiveness, the payment period is reduced to just 10 years.
Even with IBR and PSLF and other similar programs, student borrowers struggle, and so in 2020 the Trump administration halted mandatory federal student loan collection while the country dealt with the COVID-19 pandemic. Borrowers could continue to make payments if they wanted, but while suspended interest would not accrue and payments would not come due. Both the Trump and Biden administrations extended the suspension several times, most recently in December 2021 when – after threatening not to – the Biden administration ultimately agreed to put off student loan payments while the omicron variant was rampaging across the country.
The Trump administration suspended payments the week of St. Patrick’s Day 2020. Two St. Patrick’s Day weeks later, and there are no signs that payments will actually resume any time soon. In theory, payments pick up again in May, but the Biden administration is telling loan servicers not to discuss payment resumption with borrowers. Federal law requires that borrowers be notified six times prior to repayments beginning, which would probably need to start happening, well, right now.
President Biden campaigned on at least partial student debt cancellation, but nothing so far has happened on that front. Technically, though, well: no student with federal student loans has been asked to repay them during the Biden administration, and Forbes contributor Zack Friedman recently observed that Biden could just keeping extending the student loan “pause” until the end of his term. It would be a very Biden move, pushing the question of how to resume student loan payments to his successor, be they Democrat or Trumpist.
Democrats are big on student debt cancellation, for good reason: it’s very popular. More than 60% of Americans favor some kind of debt cancellation and even Biden’s modest campaign proposal of $10,000 is enough to cut the average student debt load by over 25%, something voters would no doubt remember at the polls.
More than just a slam dunk with voters, though, student debt cancellation is becoming a colossal elephant in the room whenever the student debt repayment delays are brought up. Borrowers have gone two years without repayment, and it looks like they’ll go at least most of 2022 without repayment as well. These repayment delays are actually incredibly harmful, because they’re just delays. Ten years of student loan repayments have become twelve years, perhaps thirteen years. Sure, loans aren’t accruing interest, but it doesn’t change that the repayment end date is moving further and further away for so many borrowers.
On the podcast Pod Save America, White House of Chief of Staff Ron Klain rolled out what seems an awful lot like a campaign slogan for 2024 – if not 2022 – when he said, “Joe Biden is the only president in history where no one’s paid on their student loans for the entirety of his presidency.” It’s an alluring sound bite, and as long as the Biden administration is content to relying on temporary extensions, it may remain true until the end of his presidency.