Why the Democratic candidates need to keep talking about student loans

March 31, 2020, 6:00 PM UTC

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Alison Leonhart spent most of the winter helping guests book ski and snowshoe tours at the Breckenridge Nordic Center in Colorado’s Rocky Mountains. Then came the coronavirus. “We’re not an essential business,” she says.

Operations at the Nordic Center were shut down a month before ski season typically ends in mid-April. Now she is crossing her fingers she’ll still be able to start her summer job as a kayak instructor at the beginning of June.

After taking a finance class in college, Leonhart has been focused on paying down her student-loan debt as quickly as possible. By making more than the minimum payment every month, Leonhart had already been able to pay off her undergraduate loans and to start chipping away at her outstanding balance from graduate school.

She recognizes she’s been fortunate to be in a position where she could do that, but now she’s not sure she’ll be able to pay more than the minimum. If she encounters a major emergency expense, she might not be able to make her payments at all.

More than 3 million Americans who were laid off filed unemployment claims last week, as the coronavirus shuttered nonessential businesses across the country. Many people are worried about even being able to cover the necessities, let alone whether they’ll be able to make their student-loan payments.

Forty-three million Americans owe a total of more than $1.6 trillion in student-loan debt, which ballooned after the 2008 recession.

“There’s the potential to see large numbers of students who were already struggling with their loans end up going into default,” Eddy Conroy, a researcher at the Hope Center for College, Community, and Justice at Temple University, tells Fortune.

Sen. Elizabeth Warren (D-Mass.) had been leading the charge on student debt relief before she dropped out of the Democratic presidential primary at the beginning of March. Since then, the conversation on student debt had largely fallen silent until last week, when the extent of economic fallout from the coronavirus became more readily apparent. If the shutdown continues, the need to provide additional relief to student-loan borrowers will loom large in the run-up to the general election in November. 

While the temporary suspension of interest and payments provided by the stimulus package adopted last week is good in the short term, it doesn’t offer the long-term relief that many borrowers are seeking. Democratic voters will be looking to former Vice President Joe Biden and Sen. Bernie Sanders (D-Vt.) for solutions.

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress includes some help for student-loan borrowers. Building on an executive order that waived interest for 60 days starting March 13, the stimulus package will automatically suspend both interest and payments for federal student loans through Sept. 30. Borrowers don’t need to opt in.

The suspension of payments is particularly important, experts say, because it keeps money in people’s pockets. The average student-loan payment is $393 per month, according to the Federal Reserve. For some borrowers, it can be much more than that.

The paused payments also count toward forgiveness through programs such as the public service loan forgiveness and income-driven repayment programs. In addition, the legislation puts a moratorium on all collections, which include wage garnishments and loss of tax refunds. It also protects federal emergency funds, such as the $1,200 stimulus check, from being seized if borrowers are in default.

Student loans were one of the sticking points between Democrats and Republicans during the congressional negotiations for the stimulus bill last week.

Warren has continued to advocate for debt relief after making it one of the cornerstones of her presidential platform (which would have canceled up to $50,000 in student-loan debt for borrowers with a household income less than $100,000). Working with fellow Democratic senators, she sponsored a proposal to cancel a minimum of $10,000 for every federal student-loan borrower.

Biden endorsed the proposal last week, tweeting, “Young people and other student debt holders bore the brunt of the last crisis. It shouldn’t happen again.”

In the House, Ilhan Omar (D-Minn.) and Ayanna Pressley (D-Mass.) introduced the Student Debt Relief Act, which would forgive $30,000 in debt for borrowers during the coronavirus outbreak.

Republicans argued that both proposals were unfair to people who have repaid their student loans or who did not go to college. Ultimately, the Democratic proposals to cancel debt did not make it into the stimulus package.

More drastic measures will be needed to address the underlying issue of student debt, which experts predict will soar with a new recession. Even if payments are suspended for several months, skyrocketing unemployment means that millions of people aren’t going to be making optional payments, which can be key to paying down the principal. “At the end of this six-month period, they’re going to owe just as much debt as they owed at the beginning,” Tobin Van Ostern, cofounder of social impact startup Savi, tells Fortune.

The situation is also bad for current students, who will most likely be graduating and entering the job market during a recession. Nearly 70% of current college students take out loans and graduate with an average debt of around $30,000.

“People very early on in their careers are more likely to fall behind on their student-loan payments because their employment is a lot less certain,” Doug Webber, a labor economist at Temple University, tells Fortune. “It’s much more costly to be unemployed at the beginning of repaying your student loans because interest is going to pile up.”

The coronavirus may have pushed Biden’s approach to student-loan debt relief further left after he endorsed Warren’s proposed $10,000 buy-down last week. Previously, Biden has taken a more moderate approach than either Sanders or Warren. His education plan, which would cost an estimated $750 million over 10 years, offers up to $50,000 of loan forgiveness for people who work in public service, including retroactively. All borrowers would be automatically enrolled in an income-based-repayment loan plan, with payments capped at 5% of monthly income. Loans and interest would be frozen for borrowers making less than $25,000 a year.

Sanders’s plan can be summarized as “free college, cancel debt.” He has proposed canceling the entire $1.6 trillion, saving around $3,000 a year for the average student-loan borrower. He would also cap student-loan interest rates at 1.88%. He wants to finance this through a $2.4 trillion Wall Street speculation tax over the next 10 years.

Van Ostern points out that the current moratorium on payments and interest expires shortly before the general election, giving the conversation new impetus. In addition, people tend to go back to school during a recession, which could cause the total debt to spiral even further. “You can easily see that in the not-too-distant future, we’re going to be over $2 trillion in student-loan debt, partially due to this crisis,” he says. “People are going to need help over a longer repayment period.”

More must-read politics coverage from Fortune:

—What the coronavirus shutdown means for immigrant workers
—The Supreme Court has shunned technology. Could coronavirus change that?
—Are cash handouts, tax holidays, and bond purchases the global economy’s best hope?
The workers the U.S. government deems “essential” amid the coronavirus pandemic
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: U.S. tax deadline moved from April 15 to July 15

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