Student borrowers have a staggering $ 1.6 trillion in debt, of which $ 1.37 billion is owned by the federal government. Before Federal Government Suspended Student Loan Payments Under Spring Coronavirus Stimulus Package, One Person Defaulted On Student Loans Every 26 seconds, according to the Center for Student Loan Protection.
By 2021, borrowers are expected to hold $ 2 trillion in student debt. Millions of people struggle to pay for basic necessities and meet their loan obligations. The health and economic crisis of the coronavirus has worsened the situation. Unemployment among African Americans is almost double that of white people, and more than 8 million people have fallen into poverty since May 2020, The New York Times reported.
Blacks and Latinxes are forced to borrow at higher rates and in larger amounts because of racial inequalities in income and wealth. According to a study, 20 years after attending college, the median white borrower has repaid 94% of their debt while the median black borrower still owes 95%.
The reasons are simple: these borrowers have to borrow more because they have less family wealth and are paid less after graduation, making it more difficult to repay their loans. By canceling student debt, Biden could reduce the black-white wealth gap among families with student loans by 25% and the Latinx-White gap among borrowing families.
Opponents of student debt cancellation claim it would be a godsend for the more privileged, like doctors and lawyers, who hold a lot of student debt. But the data shows exactly the opposite. According to a New York Times article, those with the least amount of debt are more likely to default on their loans.
For example, a person who left school before obtaining a diploma because they could not afford to continue their education or had too many family obligations is still forced to repay their loans. Without a degree, these students often have low-paying jobs that make it impossible to repay loans.
Canceling student debt means families will have more money to meet basic needs, afford a car, or save for retirement. In addition, it would allow those who have deferred to marry and have children the opportunity to do so. A recent study showed that Millennials spend less than previous generations because they are poorer. One of the many reasons for this lack of personal wealth is the weight of student loans.
Other opponents argue that canceling student debt would cost too much. According to a recent analysis, the federal government stands to lose $ 435 billion of its $ 1.37 trillion student loan portfolio, which means millions of people will default on these loans, putting their credit history at risk. personal credit.
Instead of doing more harm to these distressed borrowers, we should stimulate our economy and fight injustice by canceling all $ 1.6 trillion in student debt, including buying and forgiving private loans, and giving these people a chance to strengthen their economic security and that of their families.
Finally, President Donald Trump’s Education Secretary Betsy DeVos argued that it would be unfair for those who have already paid off their debt or never attended college to cancel student loans. But that completely misses the point that society works for the collective good. I chose not to have children, but I pay taxes to fund child nutrition programs, preschool education, and K-12 schools. Should I ask the government to reimburse my money? Of course not, because I proudly contribute to making society better for everyone.
Canceling student debt would not only be a lifeline for 45 million people, some of whom are struggling with the weight of their debt, but it would help build a more robust economy. He is supported by a majority of Americans, according to Forbes. And it delivers on the pledge made by so many leaders over the past year to focus on racial equity by striving to close the racial wealth gap and giving black and brown borrowers a real chance at success. .
Ultimately, Biden should be doing it because it’s the right thing to do.
Remington A. Gregg is a civil justice and consumer rights lawyer at Public Citizen (citizen.org), a progressive nonprofit consumer rights group and think tank based in Washington, DC.