Student-Loan Repayment Moratorium Goes On. Will it Ever End?

Don’t lend money to a friend, an ancient proverb advises, because you will lose both your friend and your money.

My cousin Rudy taught me that lesson. A couple of years ago, Rudy called me from the Travis County Jail in Austin, TX, asking me to go his bail.

I can’t remember why the Texans locked him up. I think he rolled a homeless man on Congress Avenue or took a leak on the State Capitol grounds. Maybe both. Rudy was a little vague about the charges.

“You gotta get me out of here,” Rudy pleaded. “The jailer is threatening to shave my face and my head. I need a good lawyer.”

“How much do you need?” I asked, thinking he would ask for a few hundred dollars.

“I need ten grand,” Rudy replied. Ten grand!

But who can say no to a relative in need? I wired the money. “Just pay me back when you can,” I told him.

Did Rudy ever pay back the loan? What do you think?

The federal student loan program is sort of like the money I loaned cousin Rudy. More than 40 million people owe Uncle Sam $1.7 trillion, and most of them aren’t paying it back.

In fact, I suspect a few million student-loan debtors have concluded that their loans are really gifts–like the money I wired Rudy.

And the government is encouraging that point of view. The Department of Education has put nine million borrowers into long-term, income-based repayment plans (IBRs). People in those plans make token payments for up to 25 years, but they will never pay off the principal on their loans.

There are millions more who have gotten economic-hardship forbearances, and they ain’t paying nothin.’

And recently, the Biden administration extended the moratorium on making student-loan payments until May 1, 2022. By the time the moratorium expires, 27 million student borrowers will have avoided making student-loan payments for more than two years.

Let’s face reality. Just like my loan to cousin Rudy, the feds will never collect all of that student-loan debt.

Richard Fossey is a professor at the University of Louisiana in Lafayette, Louisiana. He received his law degree from the University of Texas and his doctorate from Harvard Graduate School of Education. He is editor of Catholic Southwest, A Journal of History and Culture.

5 thoughts on “Student-Loan Repayment Moratorium Goes On. Will it Ever End?”

  1. Hi, Esther.

    I am on the students’ side regarding the student loan crisis and have been for 25 years. My point in this essay is that the government lists outstanding student loans as assets–in fact about a third of all federal assets consist of its portfolio of loans. Of course that is ridiculous. Most of these student loans will never be paid back.

    Nevertheless, in my view, the government has boxed itself in. Having defined student debt as a federal asset, it will be almost impossible to write it all off because that would show the national debt to be significantly larger than the government now admits.

    I have long argued for amending the Bankruptcy Code so that student borrowers who took out loans in good faith and are unable to pay them back could get relief in the bankruptcy courts. And I have often wondered why the Department of Education opposes bankruptcy relief in almost every case that gets filed.

    But I have come to realize that the federal government will never write off all these loans because they are treated as assets and the government needs to keep these assets on its books Nor, I fear, will Congress ever amend the Bankruptcy Code to assist student borrowers for the same reason—the feds need to keep these loans on the national balance sheet.

    I am not jealous that students got a two-year reprieve from making loan payments. However, I don’t think the government did student borrowers any favors by doing that because all this debt still hangs over the heads of 45 million Americans. I interpret the two-year moratorium as a desperate attempt on the part of our government to postpone the day when it will have to admit that the student loan program is a mess and that there is no clear way to fix it.

    Does that make sense to you? Thanks for writing. I appreciate challenges to my line of reasoning and opportunities to make my arguments clearer.

    I wish you a prosperous and healthy New Year,


  2. Not sure what the point of this article is other than to shame people who are still struggling. If America can forgive PPE loans, we can forgive student loan debt.

  3. I’m not exactly sure which side this guy is on. Is he jealous that people are getting a slight reprieve from spending much of their income on student loan repayment for the last 20 years? Does he think the Government should take it out in blood or maybe send people who default to debtors prison? Many of us spent hundreds of thousands of dollars on degrees. We were told we would have absolutely no problem finding a job and paying back our loans. Unfortunately, we were lied to. The feds will never collect that student loan debt? Maybe we should tax the rich and make them pay their fair share instead of expecting the middle class to burden everything.


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