Persis Yu, director of policy and general counsel at the Student Loan Protection Center, joins Yahoo Finance Live to discuss the Biden administration extending the pause on federal student loan payments and canceling student debt.
AKIKO FUJITA: The Biden administration is once again extending the pause on federal student loan repayments, this time extending the window to August 31. The president said in a statement this morning that a restart in May would have left millions of student borrowers facing significant economic hardship. and delinquencies and defaults that could threaten America’s financial stability. Some, however, are calling on the White House to do even more to deal with the looming student debt crisis.
Let’s introduce Persis Yu, Policy Director of the Student Loan Protection Center and legal counsel. Persis, it’s good to talk to you today. Repayments were to begin in May. We are now talking about an extended window of three months. What relief does that bring when you consider the financial hole so many Americans already find themselves in as a result of these student loans?
PERSIS YU: Yeah, so thanks for having me here today. It is certainly a long overdue relief. We know student borrowers are certainly struggling right now, as are many Americans. To the right? Payments were therefore due to begin in less than a month. The average student borrower has about $400 in monthly payments, which, combined with rising prices and inflation, is a price many Americans have said they can’t afford to pay right now. .
This break is therefore a welcome breath of fresh air for these borrowers, but the month of August is not very far away. And I think it’s important to recognize that the student loan system has been broken for a very long time. The president should not activate a broken student loan system. We therefore ask the President to provide for a general cancellation. It’s one of the first steps to fixing a broken student loan system. We shouldn’t put people back into debt that they really have no hope of paying back.
BRIAN CHUNG: Persis, this is Brian Cheung here. I imagine you had a dialogue with those in Washington, DC, about, you know, both the student loan forbearance period, but also the more permanent solution of forgiving student loans. We know this was a big campaign platform for the Biden administration in 2020. Do you feel like the delays we continue to see in these forbearance deadlines type messages the serious with which the Biden administration wants to take the issue of student loan forbearance?
PERSIS YU: Well, certainly, you know, Biden did, as you mention, he campaigned really hard on student debt as a crisis and promised, you know, in the campaign that he was going to provide a cancellation widespread. And many borrowers expect this. You know, these payment extensions are important because, you know, borrowers currently can’t afford to make payments. But that only calms the crisis – kicking the box, as they say.
And so we need to see widespread fixes. The administration is actively working on some of these fixes, but we need to see a lot more. And so that sets a pretty tight deadline for the president and the administration to put in place some of these fixes, like a blanket cancellation.
AKIKO FUJITA: So, Persis, when you say blanket cancellation, I mean, how do you think that should be structured precisely? There is an argument to be made that help at all levels is not necessarily the right answer, that those most in need of help should be targeted. But how do you even begin to prioritize that?
PERSIS YU: Yeah, I mean, I think that’s really the crux of the matter here, is how do you identify who needs the rescue the most? And one of the things that we know, you know, from decades of administering this student loan system is that — historically, all attempts to target relief have really failed and haven’t succeeded in obtaining this relief for borrowers who need it. it’s the most. You know, we’ve seen this through income failures during payment.
Just last week we saw a report that showed some of the servicers weren’t even counting, you know, payments from borrowers who had made payments or were eligible for $0 payments, which means that the lowest income borrowers are missing out on relief. We have seen it through the cancellation of public service loans, disability leave programs. Targeted help does not work. The way we make sure borrowers who need help get it is to make sure everyone else gets it, and that they get it in the most automatic and transparent way possible.
BRIAN CHUNG: And then Persis finally here I want to ask about the other looming issue which is the cost of tuition itself. Even if you were to cancel student debt, these are exorbitant prices that public and private universities in this country charge. How does your organization approach this for future generations of students who are not yet enrolled in university?
PERSIS YU: Yeah, I mean, so I think what we have to do is we have to look at this crisis and we have to learn from it, right? Student debt does not work as a way to finance higher education. Certainly, I think these conversations have to take place in parallel, right? That there is a problem between people who have student debt and those who prevent others from obtaining it.
And I think the big lesson we have to take from that is that as a society, as a country, we have to move away from debt-funded education, and then we have to make sure there’s 43 million of borrowers who currently have student loan debt. So we have to make sure that we relieve those borrowers, so they can move on and contribute to the economy.
BRIAN CHUNG: Persis Yu, Director of Policy and General Counsel of the Student Borrower Protection Center, thank you very much for dropping by Yahoo Finance this morning.