Treasury Secretary Steven Mnuchin speaks with reporters outside White House in Washington, DC, on March 13, 2020.
Jim Watson | AFP | Getty Images
Treasury Secretary Steven Mnuchin said Friday that the Trump administration would consider suspending people’s student loan payments as part of a larger strategy to mitigate the economic consequences of the coronavirus.
“I can tell you that’s on our list of 50 different items we’re bringing to the president for a decision,” Mnuchin told CNBC, after being asked if the administration would consider granting borrowers a three-month reprieve. “The president is all about action, action, action.”
Senate Democratic leader Chuck Schumer sent a letter to the president on Wednesday with 30 Senate Democrats, asking him to grant six months of forgiveness for those with student debt. Meanwhile, consumer advocates have warned that the impacts of the pandemic could make it hard for many people to keep up with their student loan bills.
“COVID-19 is causing economic devastation across the country, with even greater job and income losses to come,” said Toby Merrill, director of the Project on Predatory Student Lending at Harvard University.
“Suspending student loan payments is a helpful half measure, especially if interest accrual is frozen,” said Alexis Goldstein, a senior policy analyst at Americans for Financial Reform. “The most distressed borrowers would potentially have hundreds of extra dollars to go toward food, supplies and medicine.”
Higher education expert Mark Kantrowitz said there’s never been an emergency suspension of student debt.
“There is no precedent for such an action,” Kantrowitz said.
Trump may be looking to curry favor with voters in an election year where his hope of touting a vibrant economy is quickly deflating. The stock market has been reeling amid the outbreak, with the potential for more than 200 million people in the U.S. being infected under worst-case scenarios.
Democratic presidential candidate Bernie Sanders has made student debt relief a cornerstone of his campaign message. In 2016, Trump won votes from a significant chunk of disillusioned Sanders voters who appreciated Trump’s populism and his isolationist foreign policy. As Sanders’ campaign continues collapsing under the strength of the Biden coalition, Trump is betting he can win Sanders voters over again like he did in 2016.
Outstanding education debt has outpaced credit card and auto debt. The average college graduate leaves school $30,000 in the red today, up from $10,000 in the 1990s. The average monthly student loan bill is nearing $400.
Ben Winters, a legal fellow at a nonprofit in Washington, D.C., said the coronavirus has made him worried about his finances. A break from his monthly student loan bill could help him cover the unexpected travel and medical costs he expects to be hit with soon, he said.
“My budget is stretched thin without a pandemic,” Winters, 25, said.
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