Local economist weighs in on paying back student loans during Biden administration
COLORADO SPRINGS, Colo. (KRDO) - One of President Biden's first orders of business was extending the pause on federal student loan payments through at least September.
In 2019, the average student loan debt at the University of Colorado Colorado Springs was $24,645, which is lower than the national average of $30,062.
With big loans, and no federal loan payments required, KRDO spoke with Tatiana Bailey who is the Director of the UCCS Economic Forum, about paying back student loans when there is a pause.
Should you continue making student loan payments?
"If you're able to pay it, you should," Bailey said. "Every payment that you make is bringing down the principal, right? So why not get rid of that liability as quickly as you can."
Are there some cases where it is OK to not make your student loan payments?
"If you have lost your job or your hours are cut, or are struggling financially," Bailey said. "The other instance is if you have a lot of other debt."
"Let's just say you have credit card balance of $10,000 and you're paying 17-20% interest on top of that, stop making your student loan payments and put that money instead towards paying the credit card."
What if I have a private student loan and am unable to make my payments?
"Many times a lender can go in and say, I can't make my payments, my hours have been cut or I have lost my job, can we reduce the payments, or can I do interest payments only? Nine times out of 10 a private lender is going to say yes."
The pause on payments is not to be confused with student loan forgiveness, which completely cancels the loan with no payments required.
The Biden Administration has faced pressure to forgive student loans. Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren have called on Biden to cancel up to $50,000 in federal student loans per individual.
Do you think there will be student loan forgiveness?
"Even though student loan is only second to mortgage debt in the United States, it's $1.7 trillion, and I believe mortgage debt is $16 trillion, $1.7 trillion is a lot, and to just kind of wave the pen and say OK that's all gone, I don't know that even some more modern democrats are going to go for that," Bailey said.
Bailey says important to look at why so many students need loan forgiveness.
"Are they getting degrees for jobs that can help pay the student loan?"
Bailey has spearheaded the website wam.uccs.edu, where high schoolers can look at the top job openings in their community, how much the job makes and what requirements are needed.
