A campaign by Student Debt Crisis on MoveOn.org is calling on congress to cancel student loan debt to stimulate the economy. As of April 20, 2020, there has been more than 600,000 signatures and growing.
The page says that canceling student loan debt in response to the coronavirus crisis will help stimulate the economy and ease the financial burden of 45 million Americans. It would allow borrowers to focus on the necessities of shelter, food and healthcare for their families during the coronavirus crisis.
“Labor shocks like those the pandemic are likely to cause will undoubtedly increase federal student loan defaults,” the page says. “Borrowers in default on federal student loans face having their tax refunds seized and wages garnished at a time when they can least afford it. We also call on lawmakers to immediately stop these actions that hit distressed borrowers the most.”
The U.S. Department of Education has suspended collection activities on defaulted federal student loans, including wage garnishment and offset of Social Security benefit payments and income tax refunds. But, that suspension is temporary, ending on September 30, 2020.
In the long term, according to the petition, student debt cancellation would help prevent or reduce the impacts of an upcoming recession. “Student debt cancellation can boost GDP by up to $108 billion a year and would add up to 1.5 million jobs per year,” it claims.
Cancelling student loan debt could potentially help borrowers reach other financial goals that are often difficult while managing student loan debt, including saving for retirement, buying a home and starting a small business.
The hundreds of thousands of signers are able to leave comments as to why they signed the petition to cancel student loan debt.
“So many Americans are in debt from mistakes they made as late teenagers and early 20-year-old adults. If this is signed it will relieve so many Americans to be able to have all the essentials they need to provide for their families. This is a great idea and I support it!” said one signer.
“What they charge in interest make it impossible to sustain an affordable monthly payment!” commented another signer.
How to Manage Student Loan Debt
Explore options for student loan forgiveness. This includes:
- Doctors and Healthcare Professionals
- Public Service
Find an employer who offers student loan repayment. Many companies are offering student loan repayment assistance as a perk for employees. SoFi, Abbott and Fidelity are just a few that offer student loan repayment assistance.
Consider refinancing private student loans. Refinancing private student loans could potentially lower your interest rate, saving you money and getting rid of student loan debt faster. But now is not the time to refinance federal student loans for most people, with the current interest-free payment pause and the potential for some federal loans to be forgiven. If you refinance federal student loans, you’ll lose these benefits. Anytime you refinance federal student loans, not just now, you lose the option to have payments based on your income, the potential for any federal student loan forgiveness, and the ability to pause payments during times of unemployment or economic hardship. But it could be an option for high-interest private student loans.
Make big moves. There are big money moves you could make to make it easier to pay off student loan debt. Move to an area that will help repay student loans. Move to an area with a lower cost of living. Find a better paying job, if possible. Start a side hustle. Consider ways to make money from home.
Make small moves. Sign up for automatic payments to save a small percentage on your student loans. Use a cash-back credit card for everyday purchases (like gas and groceries), pay off your balance in full and use the cash rewards to pay down your debt. Only consider this if you are 100% confident you will only use your card for necessities and you will be able to pay it off every month. Otherwise, you will be paying even higher interest on your credit card purchases.
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