Easing the Burden of Student Loans: With more than forty-three million Americans carrying $1.7 trillion in student loan debt, states are finding new ways to help.

• Author: Johnson, Sharon

Student loans have become a major source of worry for Americans during the pandemic. Student loan debt-the second largest category of consumer debt after mortgages-ballooned to $1.73 trillion in the second quarter of 2021. Forty-three million student borrowers had debts, at an average of $39,351, noted a September report by the Education Data Initiative, a team of researchers that seeks to make information about the U.S. educational system accessible.

To ease the burden, the federal government instituted a moratorium in March of 2020. During this pause, which will end on January 31, 2022, loans are interest-free and not subject to repayment or penalties for nonpayment. The Consolidated Appropriations Act, 2021, permits companies to pay up to $5,250 of an employee's student loans on a tax-free basis through December 31,2025.

Outside of the federal government, "States are also addressing the challenges created by student debt because of the negative effects on individuals and the broader economy," says Andrew Smalley, a policy associate in the education program at the nonprofit National Conference of State Legislatures. "Our tracking database, which is updated monthly, shows that by early October, 178 bills in forty-three states were introduced in the 2021 legislative session."

Statistics collected by the Education Data Initiative paint an alarming picture: Student loan debt is growing six times faster than the nations economy. One out of every ten Americans has defaulted on a student loan. In total, more than one million student loans enter default each year.

"Young people cannot achieve landmark goals such as buying a home, establishing a business, or starting a family," says Smalley. "Long-term goals like saving for retirement are put on hold, which can cause distress decades after individuals complete their education."

A Federal Reserve study found that student loans prevented 400,000 young Americans from buying homes from 2005 to 2014. In 2005, 45 percent of twenty-four to thirty-two-year-olds owned their own homes, compared to 36 percent in 2014. Among twenty-five to thirty-five-year-olds who were not saving for retirement, 39 percent said they are prioritizing student loan repayment, according to research from TIAA and the Massachusetts Institute of Technology AgeLab.

"Student debt isn't just crushing young people; 6.3 million borrowers ages fifty to sixty-four and nearly a million people over sixty-five are still paying for a loved one's education or their own," Senator Elizabeth...