The $1.6tn student debt quandary hanging over the US economy
The fate of the US economy depends on the vibrancy of the American consumer — and therein lies a mystery. No one is really sure when the tens of millions of people with federal student loans will have to start paying back their obligations. The amounts involved are not small — there is $1.6tn of such debt outstanding and the government has suspended collections on the great bulk of it.
The American way of financing higher education has long been a drag on the nation’s economy. All that borrowed money helps push up the already exorbitant cost of a degree. Many students, particularly in minority communities, struggle for decades to escape their loan burdens.
But the story has taken an unlikely turn during the pandemic. US student borrowers still owe a lot, but pay very little. Federal student loan forbearance programmes remain in place more than two years after they were begun by the Trump administration in the early days…