The Biden administration is set to forgive up to $10,000 in student debt for federal borrowers. At least, that’s what the leadership of Nelnet, one of the country’s largest servicers of student debt thinks.
“The probability’s pretty high,” Jacque Mosely, Nelnet’s director of government relations, said during the company’s annually shareholder meeting last week in Lincoln, Neb.
Mosely said an executive order forgiving $10,000 per borrower could come down in the next few weeks.
Noting that student loan debt has risen from $330 billion in 2003 to $1.7 trillion in 2021, CEO Jeff Noordhoek said, “That’s a big number. In fact, it’s too big,” according to the Lincoln Journal Star.
As higher education costs continue to rise, so will student debt, he said.
“Even if they forgive debt to any level, there will be $160 billion more borrowed the next year and the year after that and the year after that.”
CFO Jim Kreuger told shareholders a $10,000 per borrower relief program would cut Nelnet’s portfolio by a third, from $1.8 billion to $1.2 billion. The company would get an injection of cash from the government for early payoffs, however.
Federal student loan repayments have been on hold since the onset of the COVID-19 pandemic, and last month Biden again pushed back the deadline for payments to resume, this time to Aug. 31.
A forgiveness in $10,000 in student debt would erase the debt for approximately 12 million borrowers, around 30% of the Americans who owe on student loans. About 10 million borrowers are in default or delinquency on their loans. Forgiving the amounts would function as an injection of cash into the economy, as borrowers would have $10,000 each to spend on goods and services rather than owing it, plus interest, to the government and servicing companies.