Student Loans: Borrowers Would Get $500 Under New Proposal

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
A new proposal from economist Preston Cooper aims to combat widespread student loan delinquency by offering borrowers a $500 incentive for making three consecutive on-time payments.
The plan comes amid escalating concerns about loan defaults, with more than 9 million Americans behind on their payments following the pandemic-era freeze.
Why It Matters
The Biden administration’s pandemic-era pause on federal student loans expired in late 2024 after multiple extensions. Since then, borrowers have struggled to resume payments.
The Federal Reserve Bank of New York estimates that 9.7 million people are past due on their loans, and delinquent debt has ballooned to over $250 billion.
Graduates of Columbia University’s lauded School of International and Public Affairs (SIPA) line up outside at SIPA’s commencement exercises at St. John the Divine cathedral May 17, 2004 in New York City. Graduates of Columbia University’s lauded School of International and Public Affairs (SIPA) line up outside at SIPA’s commencement exercises at St. John the Divine cathedral May 17, 2004 in New York City. Chris Hondros/Getty Image
What To Know
Cooper, a senior fellow at the American Enterprise Institute, argues that modest upfront payments could reignite engagement among borrowers who have become disillusioned or confused by fluctuating federal policy.