Why We Need to Cancel Student Loan Debt
Public Citizen is working hard to advocate for canceling student loan debt, which would begin the necessary task of closing the racial wealth gap and reviving our economy.
The coronavirus pandemic has brought to bear the full weight of the student loan crisis. The current economic downturn comes as the student debt total has steadily increased from year to year, reaching nearly $1.8 trillion today. Almost 45 million Americans hold student loan debt. Even worse, more than 8 million Americans have defaulted on these loans.
Canceling student loan debt would improve the lives of millions of Americans, especially Black and Brown communities who have been hit hardest by COVID-19 and the accompanying economic crisis.
President Biden campaigned on a promise to address racial inequality, and taking executive action to cancel student loan debt would set his administration on the right path to do just that with the stroke of a pen. Senate Democratic Leader Chuck Schumer (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) also believe that the president has the power to act on his own. They have introduced a resolution calling on Biden to use his executive authority to cancel student debt and have been publicly urging the president to act quickly. A companion resolution in the House is co-sponsored by Reps. Ayanna Pressley (D-Mass.), Maxine Waters (D-Calif.) and Ilhan Omar (D-Minn.) along with 53 other members of Congress.
The Cost of a Degree
While a college degree is thought of as an “investment,” the resulting debt that students accumulate forces graduates to defer their futures of buying homes and starting families as they attempt to pay it off. Over the past three decades, the number of U.S. households with student loan debt has doubled from one in 10 to one in five.
Most student loan borrowers are lower- and middle-class people who attend public community colleges and universities, HBCUs, and trade schools — not elite or “ivy league” universities.
The economic effects of the COVID-19 pandemic have only compounded the burden of student loan debt. Lost wages, increased medical costs, and other financial obstacles have made it more likely that individuals will be unable to repay their student loan debt for years to come. Canceling student loan debt would provide immediate relief and provide a much-needed stimulus to the economy by putting money into consumers’ pockets.
Student Loan Debt Exacerbates the Racial Wealth Gap
One big reason why canceling student loan debt has gone from a progressive pipedream to mainstream popularity is the increased awareness of how the student loan debt crisis disproportionately impacts Black and Brown borrowers.
Canceling student debt is a critical component of closing the racial wealth gap and enabling Black and Brown students to become homeowners, save for retirement, provide for their families, and build intergenerational wealth.
Already disadvantaged by generational wealth disparities, Black families rely more heavily on student loans than their white counterparts. One report found that 85% of Black students take on student debt for a Bachelor’s degree, compared with only 69% of white students. A 2020 report from the Federal Reserve found that 26% of Black borrowers had fallen behind on their student loan payments, compared with only 7% of white borrowers. Predatory for-profit colleges also target black students more often.
While canceling student loan debt will make a dent in centuries-long inequities resulting from widespread discrimination embedded in society, it is important to note that it is just one step in addressing racial injustice. Additional reforms like higher taxes for wealthy Americans would level the playing field for lower and middle-income Americans by ensuring the wealthiest people pay their fair share and provide the government with the funds necessary to create a more just society.
We Need Congress to Act
While President Biden has the ability to cancel student loan debt through executive action, Congress must also act to rein in the cost of colleges so that future generations are not saddled with a lifetime of student debt. With a majority in both the Senate and House, Democrats have an opportunity to lead on this issue and work with the Biden administration to address this critical issue that will continue to plague generations of students.
Public Support for Student Loan Cancelation
Canceling student loan debt is popular. In addition to being the right thing to do, canceling student debt is supported by the majority of Americans.
Prior to his inauguration, Public Citizen — along with 238 other organizations — called on President Biden to erase all student debt on day one of his administration. And last month, 960 scholars penned a letter to Biden with the same call. More recently, a multistate coalition of 17 Democratic attorneys general called on President Biden to cancel up to $50,000 in student loan debt per borrower.
We are still calling on President Biden to use his authority to cancel student debt and will continue fighting on behalf of everyday people for the President to use his authority. Erasing student debt will not only demonstrate President Biden’s commitment to racial justice, but also set the stage for four years of future progressive policy with the people’s real needs at the center.