- Leadership at the major student-loan company Nelnet expects $10,000 in relief for federal borrowers.
- The Lincoln Journal Star reported its CEO still thinks relief won’t solve costs of higher education.
- Biden is getting closer to a decision on broad student-loan relief that could be income capped.
Even the leadership at one of the largest student-loan companies thinks relief for federal borrowers is on the horizon.
“The probability’s pretty high” that President Joe Biden will forgive $10,000 in student debt for federal borrowers, Jacque Mosely, the director of government relations at the student-loan company Nelnet, said during the company’s annual meeting last week, as reported by the Lincoln Journal Star.
Jeff Noordhoek, the company’s CEO, called the $1.7 trillion student-debt load in the country “too big.” But, as the Journal Star reported, Noordhoek said forgiving that debt wouldn’t solve the rising costs of higher education because people would keep borrowing after the fact. Jim Kruger, Nelnet’s chief financial officer, said wiping out $10,000 in debt for every federal borrower would reduce the company’s future cash flow from $1.8 billion to $1.2 billion.
Nelnet did not immediately respond to Insider’s request for comment.
President Joe Biden is inching toward a decision on student-loan relief, and multiple reports have suggested the relief will be close to his $10,000 debt-forgiveness campaign pledge and potentially targeted to those making under $125,000 a year. With the pandemic pause on student-loan payments set to expire after August 31, the administration made it clear that an announcement on relief would be made before then, and borrowers are waiting to hear if they will see cuts to their debt balances.
With news of relief on the horizon, Nelnet has not been the only company that’s spoken out regarding potential debt forgiveness. In March, the CEO of SoFi — one of the nation’s largest student-loan refinancing companies — Anthony Noto wrote that Biden had continued to “waffle” on potential student-loan relief. He recommended that Biden fulfill his campaign pledge to cancel $10,000 in student debt, target the pause on payments only for those in “severe hardship,” and put the “affluent and capable” borrowers back into repayment when payments were set to resume on May 1.
Following the extension of the payment pause through August 31, SoFi later updated its 2022 guidance to note that it assumed payments wouldn’t resume in 2022.
Insider previously reported on lobbying by student-loan companies that might be keeping Biden from delivering broad relief to federal borrowers. Nelnet, for example, spent $230,000 on lobbying in 2020 and made over $352 million in profits, and all student-loan companies spent almost $4.5 million on lobbying efforts last year, OpenSecrets said.
Despite lobbying and pushback from Republican lawmakers, who have argued that canceling student debt would exacerbate inflation and cost taxpayers, it’s increasingly likely that some type of broad relief would be implemented. The question now is how much relief, and Democrats want to ensure Biden goes big and doesn’t skimp on his executive authority.
“In order to reduce the racial wealth gap and advance a just and equitable economic recovery for all, we must alleviate the burden of student debt,” Joyce Beatty, the chair of the Congressional Black Caucus, said in a recent statement. “Nothing is off the table, except inaction.”
Do you have a story to share about student debt? Reach out to Ayelet Sheffey at [email protected]