Bloomberg — President Joe Biden is considering canceling at least $10,000 in student loans per borrower, a campaign promise he made, through executive action. Here are key data points:
- $1.75 trillion – the total amount of student loan debt outstanding in the United States, according to the Federal Reserve. About 92% of this debt – more than $1.6 trillion – is in the hands of the federal government. Put another way, student loan debt is equivalent to about 6.5% of the gross domestic product of the United States.
- 43.4 million – the number of borrowers with federal student loan debt, according to the Education Data Initiative.
- $37,113 – the average balance of federal student loan borrowers. Including private debt, the number jumps to $40,904.
- Four – the number of months Biden has to make a decision. The student loan repayment moratorium should expires August 31, and the president has said he intends to either extend the moratorium or do some sort of debt cancellation before then. The deadline leaves just over two months before November’s midterm elections that will decide which party will control Congress.
- 41% — Biden’s approval rating among Americans ages 18 to 29, according to the Harvard Institute of Politics Youth Poll released Monday. His approval rating is down 18 percentage points from a year ago, according to the poll. The main reason given for his consternation was his “inefficiency”. Young Americans are likely to form a decisive midterm electoral bloc. The Harvard poll found that with more than six months to go before the election, youth turnout is expected to match the historically high turnout seen in the last midterm cycle: 36% said they would vote “definitely » ; 37% said so at this point in 2018.
- 34% – adults aged 18-29 who have student loan debt, according to the Education Data Initiative.
- 85% – young Americans, regardless of party, who favor some sort of government action on student debt, according to the Harvard poll; 38% are in favor of full debt cancellation. Only 13% think the government should take no action on this. Among young Americans who are currently not enrolled in college and without a degree, support for government action is 79%.
- $22,690 to $39,150 — the average cost of in-state and out-of-state full-time undergraduate student attendance at public four-year institutions, according to the College Board. The average cost of four-year private non-profit universities is $51,690.
- $52,000 – the average student debt owed by black bachelor’s degree holders. By race, black college graduates owe significantly more than others on average. Four years after graduation, nearly half owe an average of 12.5% more than they borrowed, according to the Education Data Initiative.
Supporters of a broad cancellation include prominent Democrats, President Barack Obama’s former education secretary and a former Trump administration education department official. Biden said he wasn’t considering canceling $50,000 in debt for each borrower.
A recent analysis by the Federal Reserve Bank of St. Louis found that missed payment rates on student loans are likely to spike when forbearance ends.
“Severe delinquency rates for student debt could return from historic lows to previous highs in which 10% or more of debt was in default,” Lowell Ricketts, data scientist for the Fed’s Institute for Economic Equity in St. Louis, says in the post.
Interest rate for federal student loans vary by loan type and are usually set in May for loans disbursed from July to the same month of the following year, according to the Federal Student Aid Office of the Department of Education.
Students currently pay 3.73% for the most limited subsidized loans, to 5.28% for unsubsidized loans. Unlike other forms of debt, such as credit cards and mortgages, the loans are daily interest loans, meaning interest accrues daily. Parents of college students and graduate students pay 6.28%. This increases the amount outstanding on the loan and interest is then charged on this higher principal balance, which increases the overall cost of the loan.
Most federal student loans also have an origination fee which is a percentage of the total loan amount. This commission is deducted from each loan that is disbursed. This means that the money received will be less than the amount the student actually borrowed and must pay interest.
Interest rates on federal student loans are set by federal law using the May 10 Treasury Bill Auction and adding 2.05 percentage points to 4.6 percentage points depending on the type of ready.
–With the help of Janet Lorin.
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