By Kristin Myers, Editor-in-Chief

ICYMI: Is the Student Loan System Too Broken To Bring Back?

In case you missed it, the freeze on federal student loan payments has highlighted problems within the entire student lending system, which leads many to ask the question: Is the student loan system too broken to bring back?

Before the pandemic triggered a pause on student loan payments, interest on student loans caused many borrowers to fall farther and farther behind on their financial goals. So for the millions of Americans with federal student loans, the freeze on payments has allowed some borrowers to pay off other debts, buy homes, have children, or invest in the stock market. But according to experts, the money that was freed up has likely contributed somewhat to rising inflation, which rose to an annual rate of 8.6% in May, up from 8.3% in April.

Many progressives have called on the White House to eliminate student loan debt, and the Biden administration is reportedly preparing to take some action on the $1.7 trillion of federal student loan debt that borrowers collectively owe. While critics say it would be an unfair subsidy, penalizing those who didn't borrow or go to college, supporters point to the large share of student loans in default, deferment, or forbearance as the sign of a broken system.

-Kristin

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Off the Charts

Monthly spending in April for food, housing, gasoline, and utilities like gas and electricity consumed 70% of the average Social Security payment of $1,479 (or $2,958 for two-beneficiary households), according to an analysis by The Balance. In dollar figures, the average monthly Social Security payment, based on April inflation figures from the Bureau of Labor Statistics, was worth $60 less than it was last year due to inflation.