US student debt crisis

US student debt crisis: With the pause on student loan payments expiring at end of August, will Joe Biden give borrowers a break and extend it?

New York, US – Dara Zucker says she’s stuck. The 28-year-old has been making monthly payments on her student loans since she graduated with a degree in psychology from Kenosha, Wisconsin’s Carthage College in 2016, but her balance has only gone up.

“I feel stuck in my life,” she told Al Jazeera, about the $39,000 she still owes on her $35,000 loan.

Before The Pause On Federal Student Loan Payments Expires, Joe Biden Must Cancel All Student Loan Debt

And Zucker is not alone – Americans owe nearly $1.75 trillion in student loan debt, an increase from $481bn in 2006, according to the Federal Reserve Bank of St Louis, the highest level of student debt in the world.

As the country’s student loan debt crisis deepens, borrowers, policymakers, and economists agree that something must be done – but what exact steps need to be taken remains up for debate.

At the onset of the COVID-19 pandemic, the Trump administration halted student loan interest and later suspended loan payments as lockdowns spurred mass layoffs and business closures. President Joe Biden, who campaigned on a promise to “immediately cancel a minimum of $10,000 of student debt per person”, has repeatedly extended that moratorium.

These borrowers will refuse to pay student loans if Biden restarts payments in two weeks

However, the payment freeze expires at the end of August, and unless Biden extends it, 45.4 million student loan borrowers will be expected to resume monthly loan payments on September 1. The average monthly student loan payment in the United States is $393

Zucker, who says that she used the pause in payments to help her disabled parents buy groceries, just received a promotion and raise at the background check company where she works as a business development representative. But the raise also means her salary-dependent, the monthly student loan payment will double to $220 when payments resume.

“I’m grateful for my job and salary,” she said in an interview. “But the fact that I can make my payments and still can’t live my life as an adult by buying a house or having a wedding – I just can’t do those things.”

Two Weeks Before Payments Resume, Progressives Tell Biden ‘Time to Cancel Student Debt’

 ‘The big picture

American tuition at public four-year universities climbed 31.4 percent between 2010 and 2020, the Education Data Initiative research group found. Tuition in many other countries is either fixed or fully free, as in Germany, Iceland, and Sweden. A year of college at a four-year US university costs $35,551 on average, including tuition, fees, on-campus housing, books, supplies, and other expenses, according to the National Center for Education Statistics.

The colleges to which a student applies determine how much financial aid they are eligible for, depending on the cost of attendance and the family’s ability to contribute towards tuition and fees. The student may be eligible for federal grants, subsidized loans, and work-study. 

5 Things To Know About Debt Cancellation

The student can then apply for a loan to finance the remainder of the costs.

The federal government doles out the majority of the loans, with the private sector lending the remaining 7 percent. Borrowers are then required to begin making payments six months after leaving college, whether they graduated or not.

Several economists Al Jazeera interviewed said that universities and the higher education industry at large need to do a better job of informing students about the debt they are taking on and what it looks like to enter various types of repayment programs after graduation.

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