What was troubling about the cancellation suggested by Biden was that the government should not cancel the debt of the people who went to “Harvard, Yale and Penn”. Of the 45 million Americans in debt for their student loans
, very, very few have gone to Harvard, Yale, or Penn. Only 3%
of Harvard College students incur federal student debt. Simply put, student debt is not an elite problem. the large majority
of student loan borrowers are lower and middle class Americans who have had to take on debt to access post-secondary education and pay dearly for it.
For many students, loans are inevitable. For example, in Georgia, 90% of students attending Spelman
(a private HBCU) and 84% of students attending Savannah State
(a public university) have federal student loans. In Biden’s home state, 75% of students from Delaware state
take out federal student loans. These are the borrowers who would benefit from a loan cancellation.
It is important to note that studies have shown that student loans are disproportionately detained
by women, black and Latin student loan borrowers – providing relief to these borrowers would advance racial and gender equity interests.
And at all income levels, black households, long refuse
asset building opportunities, and subject to wealth stripping policies, are more likely to hold debt than their white counterparts. The JPMorgan Institute find
, “Black student loan borrowers with higher student loan balances and repayment charges, and less likely to make progress on their loans compared to white and Hispanic borrowers.” Because black families lack the intergenerational wealth that can provide essential cushion against economic shocks, even black borrowers in the highest income quartile are more likely
to experience a default than white borrowers from the lowest income quartile.
The people hardest hit by student loan debt are also those hardest hit by the pandemic. Women disproportionately supported big blow
jobs lost. Black communities are not just facing higher rates
coronavirus infection and death, but jobs for black women are simply do not come back
at the rate they are for white workers.
Importantly, while $ 10,000 blanket student loan forgiveness would wipe out the debts of nearly two-thirds of defaulting borrowers, $ 50,000 blanket debt forgiveness is necessary
to begin to bridge the racial wealth gap.
Some opponents Claim
that Income Based Refund (IDR) avoids the need for a cancellation. The IDR caps a borrower’s monthly payment based on their income and family size and, in theory, provides for the cancellation of any remaining balances after 20 or 25 years of repayment. But since its inception in the mid-1990s, the IDR has been plagued
by implementation failures.
Borrowers, especially low-income borrowers who the plans were supposed to benefit from, struggled to access and be successful in the plans. While the IDR is a critical option, it has failed to deliver on Congress’ promise of student loan relief. Similarly, the Ministry’s civil service loan forgiveness program has successful
in over 97% of rejected claims, and its disability release program provided cancellation
to less than 28% of eligible borrowers.
Biden has promised to fix these programs and solve the college affordability crisis. And he must. However, borrowers, their families and their communities cannot wait 20 or 25 years with the hope that the Department of Education finally succeeds in what it has failed to do for decades.
Finally, drawing lines to distinguish who deserves relief will inevitably leave deserving borrowers out. Limiting debt relief through income, for example, ignores the role of wealth in determining who gets into debt and who struggles to repay, and will exclude many black households with twice the amount of debt. female student and just a fraction of the total wealth of their white peers. As the Distribution
Stimulus payments, policies to provide targeted aid to the “poorest” have consistently failed to reach all the Americans policymakers intended to help.
Due to the nature of the student loan portfolio, providing a certain amount of relief per borrower is already used to target relief, as the highest paying and most indebted borrowers will continue to owe large amounts of debt. . In addition, relief for student borrowers is already targeted; it offers relief only to those who cannot afford higher education without going into debt, and not to the “elite” – like the 97% of Harvard College students – who have already graduated without going into debt.
Biden has promised redress that will correct these long-standing systemic injustices, and borrowers can’t wait. He’s got to keep that promise now.