Bloomberg — President Joe Biden is considering forgiving at least $10,000 in student loans per borrower, a promise he made on the campaign trail, through executive action.Here are key data points:
- $1.75 trillion — the total amount of outstanding student-loan debt in U.S., according to the Federal Reserve. About 92% of that debt — more than $1.6 trillion — is in the hands of the federal government. In other words, the student-loan burden is equivalent to 6.5% of U.S. GDP.
- 43.4 million — the number of borrowers with federal student-loan debt, according to the Education Data Initiative.
- $37,113 — the average balance for borrowers of federal student loans. This number increases to $40,904 when you add private debt.
- Four — the number of months Biden has to make a decision. August 31 is the expiration date for the student-loan payment moratorium. President Biden has stated that he will either prolong the moratorium, or make some debt cancellations prior to then. The deadline leaves just over two months until November’s midterm elections that will decide which party controls Congress.
- 41% — Biden’s approval rating among Americans aged 18 to 29, according to the Harvard Institute of Politics youth poll released Monday. The poll shows that his approval rating dropped by 18 percent from last year. The top reason cited for dismay was his “ineffectiveness.” Young Americans are likely to be a decisive voting bloc in the midterms. Harvard’s poll found that with more than six months until the election, youth turnout is expected to match the historically high turnout seen in the last midterm cycle: 36% said they will “definitely” vote; 37% said so at this point in 2018.
- 34% — adults aged 18 to 29 who have student-loan debt, according to the Education Data Initiative.
- 85% — young Americans, regardless of party, who favor some sort of government action on student debt, according to the Harvard poll; 38% favor total debt cancellation. Only 13% of those surveyed believe that the government shouldn’t take action. Support for the government is 79% among young Americans not currently enrolled at college, and those who haven’t earned degrees.
- $22,690 to $39,150 — the average cost of attendance for full-time in-state and out-of-state undergraduate students at public four-year institutions, according to the College Board. Average cost for private four-year non-profit universities is $51,690
- $52,000 — the average student debt owed by Black bachelor’s-degree holders. Black college graduates have a higher average debt than other students, based on their race. The Education Data Initiative reports that almost half of college graduates owe more than they borrowed after four years.
Proponents of a broad cancellation include prominent Democrats, President Barack Obama’s former education secretary and a former official in the Trump administration’s education department. Biden said that he will not forgive debts exceeding $50,000 for any borrower.
The Federal Reserve Bank of St. Louis recently found that the rates of student loan payments missed are on the verge of increasing when the forbearance period ends.
“Serious delinquency rates for student debt could snap back from historic lows to their previous highs in which 10% or more of the debt was past due,” Lowell Ricketts, a data scientist for the Institute for Economic Equity at the St. Louis Fed, said in the post.
Interest rates for federal student loans vary depending on the loan type and generally are set in May for loans disbursed from July to same month of the following year, according to the Department of Education’s Federal Student Aid office.
Current student rates are currently 3.73% on the most restricted subsidized loans and 5.28% on unsubsidized. Like other debts such as mortgages or credit cards, these loans accrue interest daily, and are not subsidized. Graduate students and parents of students are charged 6.28%. The principal balance is increased, and the interest rate on it rises. This increases the total cost of the loan.
A percentage of total federal student loan amounts is charged an origination fee. The origination fee is taken from every loan disbursed. The student will receive less money than what he or she actually borrowed. This is why interest charges are added to the loan amount.
Federal law sets the interest rates for federal student loans by applying the May 10-year Treasury Note auction. Based on loan type, 2.05 percent to 4.6 percent is added.
–With assistance from Janet Lorin.
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