HR Pros Monitor Student Debt Debate as President Biden Mulls Cancellation

Andrew Deichler By Andrew Deichler April 7, 2021
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HR Pros Monitor Student Debt Debate as President Biden Mulls Cancellation

​President Joe Biden may be open to canceling more federal student debt than he's previously indicated, according to a recent interview with White House Chief of Staff Ron Klain. With many HR professionals both in and out of college structuring their lives around student debt, the implications of any executive action are far-reaching.

Broad Impacts of Debt Cancellation

The high cost of education impacts Americans both in and out of college. In a news conference in Boston last Thursday, Rep. Ayanna Pressley, D-Mass., and Sen. Elizabeth Warren, D-Mass., framed the conversation around student debt as one of racial, economic and generational justice. Pressley noted that much of the reliance on student loan debt within Black and Latino communities can be attributed to illegal, discriminatory practices like redlining, which have kept people of color from accumulating generational wealth and resulted in borrowers taking on much more debt than white recipients.

Warren noted that 40 percent of the people who are grappling with student loan debt were unable to finish college. Therefore, many people are trying to pay off student loan debt while working jobs that pay wages for workers with high school diplomas.

For current students, tuition fees and other expenses often prevent them from taking full advantage of what their schools have to offer. Kyra Sutton, Ph.D., a faculty member at the Rutgers University School of Management and Labor Relations in New Brunswick, N.J., explained that students who are managing financial disparities tend to work full time while going to school so that they can graduate with as little debt as possible.

Unfortunately, that might also mean forgoing a crucial internship to maintain a job. Sutton has observed many HR students graduate without internship experience. "Most students paying their way through college can't complete unpaid internships," she said. "The challenge is, especially in HR, often employers want college students that have HR experience."

Furthermore, students who work full time often can't afford to live on campus and thus aren't able to participate in various clubs and organizations. "As a result, they miss out on building relationships," Sutton said. "Often, those relationships could help them identify a competitive job, post-graduation. Also, I have seen some of our top students, who would perform well in our master's program, leave school and pursue a job because they can't afford graduate school."

Employers have an opportunity to help workers who are trying to manage overwhelming student debt through loan repayment programs. These programs, which were trending upward from 2018 to 2019, dropped off once the COVID-19 pandemic started. But with hiring now surging, more companies are likely to begin adopting loan repayment services again.

However, these programs have long been hamstrung by Section 127 of the Internal Revenue Code, which caps employer-provided education assistance at $5,250 per employee and until recently did not include loan repayment. The Society for Human Resource Management continues to advocate for increasing that payment threshold, as well as making loan repayment a permanent part of Section 127; as of right now, repayment benefits are only extended through the end of 2025.

Presidential Actions

Klain explained that President Biden asked Education Secretary Miguel Cardona to put together a memo on Biden's legal authority to forgive up to $50,000 in student debt. However, Klain was quick to point out that Biden is simply exploring his options right now and has not made a decision either way.  

Biden is also expanding the pause on student loan interest and collections to include over a million borrowers who have defaulted on loans made by private lenders.

The president also recently reversed a policy instituted by President Donald Trump's administration that had resulted in over 73,000 people receiving only partial loan forgiveness after being defrauded by for-profit colleges. Biden's action, which fully forgives these loans, will cancel more than $1 billion in student debt.

While any further actions on student loans remain unclear, White House Press Secretary Jen Psaki noted that the president is taking a close look at his options, and "examining the authorities" he has to address existing loan forgiveness programs. She also said that Biden would be "happy to sign" a student loan cancellation bill passed by Congress. 

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