Farzad Kapadia has been paying off his $130,000 in student loans since 2012.
During the pandemic, a pause on federal student loan payments set in March 2020 temporarily lifted the burden for Kapadia, 40, though he continued to make payments on smaller loans with private lenders.
“I can’t describe the amount of relief it’s given me. It’s been life-changing,” Kapadia said. “Prior to the moratorium, I would burn through every single check, I’d have nothing left at the end of the month. I’d be going into credit card debt.”
The pause is scheduled to expire on 1 May after two years in place, and Kapadia – who is one of nearly 45 million Americans with student debt – said that he was “terrified” at the idea of payments getting started again, especially since inflation has meant his cost of living has gone up. Over the last decade, Kapadia has managed to pay off most of his principal loan amount, $80,000, but is still working to pay off the $50,000 of interest his loan has accrued.
“Having a huge chunk taken out immediately and put towards interest payment, despite having paid back the full principal balance, I just find that to be usury and cruel, really,” Kapadia said.
Kapadia is joining hundreds of borrowers who are heading to Washington DC on 4 Aprilto protest against student debt and advocate for Joe Biden’s cancellation of student loans. Among the 60-plus organizations taking part are MoveOn, the Working Families party, NextGen America and the Hip Hop Caucus.
Activists say the expiration of the loan pause and the economy’s high rate of inflation mean there is even more urgency to address the student debt crisis.
The Debt Collective, a union of borrowers, is organizing the rally and said protesters from across the country will be traveling to DC for the event. The organization said that if Biden allows payment on federal loans to start again on 1 May, the collective will commence a debt strike once payments resume – a tactic that the group has coordinated before.
“There’s really no good reason to restart payments, especially when household budgets are already being squeezed by the cost of living going up,” said Thomas Gokey, legal and policy director for the Debt Collective. “To put an additional, on average, $400 student loan payment on millions of households is really adding a lot of pain when people are already experiencing it quite a bit.”
The concern is shared among many with student debt: A survey of more than 20,000 borrowers by the Student Debt Crisis Center conducted in February found that 92% of fully employed borrowers are concerned about being able to afford their student loan payments because of inflation.
Along with the general rise in cost of living affecting borrowers, inflation could affect the interest rates of those who have debt with private lenders. While many with federal student loans have fixed interest rates, those who have debt with private lenders can be subject to increased interest rates after the Federal Reserve raised interest rates by a quarter percentage point this month.
While the White House and the Department of Education has been mum on any plans around extending the pause, Biden’s chief of staff, Ron Klain, suggested that the administration is considering policies that go beyond a moratorium extension.
“The president is going to look at what we should do on student debt before the pause expires, or he’ll extend the pause,” Klain said in early March, adding that Biden is “the only president in history where no one’s paid on their student loans for the entirety of his presidency”.
“The question whether or not there’s some executive action on student debt forgiveness when payments resume is a decision we’re going to take before payments resume,” he said.
On Thursday, a group of nearly 100 lawmakers sent a letter to Biden urging him to extend the pause on federal student loans until at least the end of the year and ultimately work toward debt cancellation. The lawmakers cited Klain’s recent comments as “encouraging to millions of borrowers across the country”.
Advocates have noted that the momentum around student debt cancellation has continued to grow as the pause on federal loans, which was first undertaken by Donald Trump’s administration, has been renewed several times, giving borrowers a glimpse at relief.
“We’re getting to a point with loan pauses that one of the things that [the administration] talks about is wanting to have a smooth transition to repayment,” said Natalia Abrams, president and founder of the Student Debt Crisis Center. “We’ve gotten to a point that one of the only ways to do that is cancel student debt.”
Kapadia said he was hopeful that the administration would consider cancelling student debt, “leveling the playing field”, but was anxious about the amount of time the White House is taking to act.
“You’ve got folks making payments their entire adult lives,” he said. “[Biden] has the complete authority to do something to drastically to change millions of lives, and he’s sitting on it.”