Rep. Alexandria Ocasio-Cortez (D-N.Y.) took to the House floor on behalf of the Student Loan Debt Caucus last week to make the case for widespread student loan forgiveness.
"We as a country are profiting off of insurmountable and crushing educational debt, and it is wrong," she said.
The progressive lawmaker has been outspoken in urging President Joe Biden to cancel $50,000 worth of federal student loan debt per borrower. But she's not the only prominent Democrat who has called on the administration to forgive federal loans. Senate Majority Leader Chuck Schumer (D-N.Y.) has said the president could forgive student loan debt "with the flick of a pen."
As a presidential candidate, Biden campaigned on canceling up to $10,000 worth of student debt per borrower. However, this has been a difficult promise to keep, and Biden has signaled that he doesn't want to use executive authority to forgive student loans.
House Speaker Nancy Pelosi (D-Calif.) has previously said that canceling student debt "has to be an act of Congress." Opponents argue that student loan forgiveness comes with a high price tag that disproportionately benefits the wealthy.
Read more about student debt forgiveness below, and consider your alternative student loan repayment options like student loan refinancing. Visit Credible to view student loan refi offers without impacting your credit score.
AOC recounts her student debt story
In her Dec. 2 speech, AOC leaned on her personal experience as a millennial student loan borrower and first-generation college graduate to bring attention to the issue of "crushing" student loan debt.
"Growing up, I was told since I was a child, your destiny is to go to college," AOC said. "That's what's going to lift our family up and out. That is our future. That's what we're here to accomplish."
Ocasio-Cortez recalled college recruiters visiting her high school and telling students that higher education is worth the cost. That's in part because 65% of jobs in America require an education beyond high school, she said.
"We give 17-year-olds the ability to sign on for $100,000 worth of debt, and we think that's responsible policy."
Now 32 years old, AOC said she has over $17,000 in student loan debt from attaining her undergraduate degree. She didn't go to graduate school, believing she couldn't afford to borrow more student debt.
Ocasio-Cortez referenced statistics from the Federal Reserve, saying that first-generation college students like herself are two times as likely to report being behind on student loan payments. She also said that hundreds of thousands of borrowers have a higher loan balance now than when they first borrowed them due to interest.
If you're unable to keep up with surmounting student loan debt, refinancing is one option to help you pay off your loans faster at a reduced interest rate. Student loan refinance rates are near all-time lows, according to data from Credible. You can browse student loan rates from real private lenders in the table below.
'Ridiculous assertion’ that canceling student debt benefits the wealthy
Opponents of student debt forgiveness argue that loan cancellation would disproportionally benefit higher-income Americans. The University of Chicago’s Becker Friedman Institute for Economics found that erasing all student loan debt would allocate $192 billion to the top 20% of earners and just $29 billion to the bottom 20% of low-income households.
Despite the claims that canceling student debt benefits wealthy Americans, Ocasio-Cortez dismissed this as a false narrative.
"Do we really think that a billionaire's child is taking student loans?" she asked. "If you are taking on student loan debt, it's because you are likely a working or middle-class person."
AOC's statement is supported by a recent report from the Roosevelt Institute, which asserts that "people from wealthy backgrounds (and their parents) rarely use student loans to pay for college."
Student loan forbearance has given borrowers ‘breathing room’
Payments on federal student loans have been paused since March 2020, when then-President Donald Trump signed the CARES Act into law. The Education Department has extended the federal forbearance period through January 2022.
AOC used the deferment period as an example of how young borrowers can benefit from student loan forgiveness. She said that forbearance has given borrowers "breathing room" to meet other financial obligations, like buying houses and starting families.
But without any further political action, federal Direct loan payments are set to resume in February 2022. A recent survey found that 9 in 10 borrowers who work full-time will be unable to make their monthly payments when forbearance ends.
One option to make student debt payments more manageable is to refinance to a longer-term repayment plan. A recent Credible analysis found that borrowers were able to reduce their monthly payments by more than $250 by doing so. Use a student loan refinance calculator to determine if you can save money on the remaining balance of your college debt, and visit Credible to begin the application process.
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