Maxine Waters is the Congresswoman representing California’s 43rd District. She is also the chair of the House Financial Services Committee. Maxine Waters is known for her powerful position for the women, children, and people of color, as she is the first African American chair of HFSC. Although she was elected in 2018, she has dedicated 40 years to public service. Besides, she is known for her advocacy for student loan forgiveness. Maxine Waters student loans supported forgiveness, particularly $50,000 debt cancellation, by joining others to create a resolution. This resolution was presented to Joe Biden, and it aimed to bring such huge debt cancellation through executive action.
Debt Cancellation Requests
As the majority of students struggle with debt payments, many officials requested the government to grant forgiveness. In March 2020, Joe Biden showed his favorable position toward forgiveness. He tweeted that $10,000 forgiveness should be granted to students to reduce their debt burdens.
After Biden was elected as President, the focus shifted to his actions to see if he will forgive the debt. Many people expected that during the pandemic recovery/economic stimulus package, Biden would cancel some debt. However, no debt cancellation was involved in the benefits. Such positions created questions about whether Biden supported direct forgiveness to students.
As a response to such concerns, the White House Press Secretary Jen Psaki tweeted that the President still supports the debt forgiveness idea. She also added the officials are checking the possibility of executive action. However, the President is also willing to sign such a bill through Congress.
In this tweet, one point should be underlined, and you need to be aware of it. Executive action allows the President to pass a law without the need to get approval from Congress. Meanwhile, the legislative way requires Congress to approve any action. This difference made issues even challenging.
$50,000 Loan Forgiveness
While people were interested in $10,000 forgiveness, another pressure emerged to be more attractive- $50,000 loan forgiveness. Senator Warren, Majority leader Schumer are the people behind this request. They claimed that the President has the power to pass this bill without getting Congress Approval.
As mentioned above, this technique is called executive action. Hence, they pressured the President to sign such a benefit soon so that borrowers can get debt relief. However, there also exist problems. First, Biden never talked about the necessity of $50,000 forgiveness. He only discussed the possibility of $10,000 forgiveness per borrower. Second, Biden prefers getting Congress approval for any debt forgiveness idea.
Maxine Waters Student Loans Forgiveness
Congresswoman Maxine Waters also supports the $50,000 debt forgiveness idea. She joined another Congresswoman, Ayanna Pressley, and became co-lead of a resolution that requested debt forgiveness worth $50,000 to be canceled. This resolution requires president Joe Biden to forgive the debt through executive action and supported by Senator Warren and Majority Leader Schumer. Besides, the resolution specifies that debt forgiveness should be non-taxable.
Maxine Waters supported student loan forgiveness in 116th Congress. She said that it is the right time to forgive debt as many people struggle to maintain living conditions due to pandemics. She added that forgiving $50,000 student loans will bring justice to people who faced challenges to get an education.
As mentioned, Maxine Waters joined the resolution with Ayanna Pressley, Ilhan Omar, Alma Adams to create a $50,000 forgiveness request. This resolution was planned during December 2020 to suggest to president Joe Biden to forgive this amount on his first day of presidency. The resolution indicates that the House of Representatives:
- Recognize the efforts of the Education Secretary authority to eliminate federal student debt through existing actions
- Requests the President to cancel $50,000 student debt for federal borrowers using executive action or any other way under the law
- Suggests the President to use executive action, which is acceptable under the Internal Revenue Code, to eliminate the taxability of debt forgiveness
- Asks the President to use executive action for debt cancellation to ensure the fair distribution of wealth among races
- Requests the President to stop debt collection till the COVID-19 pandemic ends entirely.
Non-Collection of Debt Repayment
Although forgiveness was not achieved, Maxine Waters’ support for student loans non-collection period succeeded. On this first day of the presidency, Joe Biden requested the Education department to stop the federal debt collection process for eight months. Previously, during the Trump Administration, the federal debt forbearance also happened.
However, forbearance was for short periods of one or two months. Therefore, many people expected that Biden would extend the forbearance period but again for a short time. Hence, when Biden prolonged the debt non-collection period till September 2021 by eight months, this benefit was unexpected for the majority. Sure, Maxine Waters requests the President to stop student loan repayment till the end of the pandemic. However, eight-month forbearance is also a good beginning for long-term debt repayment suspension.
There is still no action taken for the forgiveness; regardless, it is an executive or legislative action. Yet, such pressure from the officials to grant forgiveness can result in some debt cancellation.
Maxine Waters and Big Banks CEOs
Unfortunately, not all actions of Maxine Waters were in favor of student loans or helped to eliminate this problem. In 2019, Maxine Waters questioned seven bank CEOs about student loans. She asked CEOs what they are planning to do to help the student loan debt crisis.
This question might seem normal, but it has a drawback. In 2010, the Obama Administration eliminated federally guaranteed loan options that the banks distributed. Hence, these banks stopped lending debt to students around those times.
As a result of this question, all CEOs noted that they have nothing to do with the debt crisis as they do not lend. Many people and experts blamed Maxine Waters for being unaware of the details of the student loan program.
We previously discussed the position of Maxine Waters on student loans. In short, she also requested $50,000 forgiveness from the President, which should be non-taxable. Taxability deserves a separate explanation. Many student loan borrowers are trying to achieve student loan discharge or relief for their huge debt burden. Sure, receiving thousands of dollars as debt forgiveness is an excellent option.
However, taxability should be considered. When borrowers finally find out that they are free of some debt, they fall into the trap of taxes. Suddenly, they need to pay a considerable income tax due to forgiven debt, which is another reason to incur debt to afford these taxes. Hence, the non-taxability of student aid programs is a significant focus.
Previously, Biden also expressed his favor to remove taxes for debt cancellation options in his plan “Education beyond High School.” He specifically focused on Income-based programs. Income-based programs grant forgiveness for the remaining debt after the payback period ends. Biden noted that he wants to change the tax code so that borrowers do not need to pay tax for the forgiven amount. He added that borrowers should not be worried about taxes when they are finally free from student loans.
Effects of Loan Forgiveness
Maxine Waters supports student loan forgiveness like many other officials. Besides, around 325 organizations like American Psychological Association and National Consumer Law Centers joined these calls to eliminate student loan debt. More than a million people also signed a petition to express their need for forgiveness.
However, the question remains – What will happen if debt forgiveness is granted? Experts against this idea claim that forgiveness will not help poor people struggling with economic difficulties during a pandemic. They note that the majority of debtors are graduates, which means they are higher earners in society. Such people mainly save money rather than spending more. For these reasons, forgiveness will not stimulate the economy.
On the other hand, advocates like Maxine Waters believe that student loan payments are a challenge for poor and struggling classes of society, such as women and people of color. Due to the pandemic, these people faced even more challenges. Hence, forgiveness will help such people.
Why Maxine Waters Believes Forgiveness Will Work?
In the resolution, Maxine Waters and other advocates show why they believe $50,000 forgiveness is necessary. They stated that the world is going through a pandemic crisis that affects the financial well-being of borrowers. This pandemic resulted in a rising cost of living and lower wages. As a result, people who did not even overcome the effects of the previous recession found themselves in even bigger trouble. Besides, the officials claimed that the debt is distributed unfairly. Black students, Latinx students, and women borrowers are among the borrowers with the highest debt rates.
Maxine Waters and other supporters added that if the debt cancellation is not granted, the current recession will get more serious, and the wealth gap will enlarge. They suggested that the only solution to this problem is debt cancellation.
Financial Side of Forgiveness
Considering that the current level of student loan debt is $1.7 trillion, any debt forgiveness will help reduce this amount significantly. $10,000 debt forgiveness will decrease this amount to around $1.3 trillion. As a result, about 30% of the federal loan borrowers will eliminate the debt. In other words, approximately 14 million borrowers will wake up to a debt-free morning.
Meanwhile, $50,000 will bring even better results for borrowers. The national student debt amount will fall to 700 billion from $1.7 trillion. Instead of 14 million, 36 million peoples’ debt will be forgiven entirely. It means, 80% of borrowers will have no debt for education. Sure, even after such huge debt forgiveness, there will be people who are left with considerable debt amounts. We will talk about how these people can eliminate debt in the next sections.
What about the Remaining Debt?
Although Maxine Waters tries to help people by reducing their student loan debt, others will still struggle with debt repayment. Besides, private loan borrowers are not even included in $50,000 forgiveness requests.
If you want to get forgiveness for your federal debt, you can utilize the existing programs. For example, Public Service Loan Forgiveness eliminates student debt in return for 120 payments. However, you need to work in the public sector during your progress toward forgiveness. Meanwhile, Borrower’s Defense to Repayment helps borrowers that for-profit schools misled. Teacher Loan Forgiveness and Perkins Loan Cancellation are other available options.
Additionally, Discharge programs exist. It is possible to get rid of student debt for death, bankruptcy, total and permanent disability, school closure, etc. You can get more information about forgiveness and discharge options in Student Loans Resolved blogs.
What about Private Debt Borrowers?
Some people who do not qualify for federal debt choose private lenders as a source of funding. The private student debt does not bring many benefits compared to the federal debt. First, the interest rates are usually higher for private loans. Second, private companies do not provide many forgiveness programs or discharge options as the government does.
There is almost no way of receiving debt forgiveness for private student loans. Neither there exists a program, nor Maxine Waters’ student loan forgiveness can help. Only a few private lenders forgive the debt if the borrower dies or becomes permanently disabled. Otherwise, you have to pay the debt.
One of the best actions to resolve private student debt repayment issues can be refinancing. Refinancing happens when you get a new loan and payout your existing loan. This strategy works when a new loan has better loan terms, such as reduced interest rates. In this way, you save money from repayment. Besides, refinancing is a good idea when you do not like how the loan servicer operates. As you get a new loan, your Maxine Waters Student loans servicer changes. However, before you choose an option, make sure that you get expert help. Debt specialists can analyze your finances and advise the most suitable debt management technique. As a result, you save money and solve your debt concerns in a short period.