We must address the issue of student debt. How?
The cost of college in the U.S. has increased by more than 25 percent in the past ten years. This astonishing figure has left a mounting $1.6 trillion of student debt that affects more than 45 million Americans. This number is expected to surpass $2 trillion during the next four years if tuition increases.
The Biden Administration is addressing this burden by extending the current federal suspension of monthly payments until September 30. “Too many Americans are struggling to pay for basic necessities and to provide for their families,” the Department of Education reported. “They should not be forced to choose between paying their student loans and putting food on the table.”
However, lawmakers are split on what the next step of providing relief should be. Of the 90 percent of borrowers who were able to take advantage of the suspension, about six in ten reported it would be difficult for them to resume payments in the near future. This has led to mounting pressure on Congress to take action. Talks of cancelling all student debt led to legislation in the House last year. The charge was led in the Senate by then-Minority Leader Chuck Schumer (D-NY), a long-time advocate of cancellation, but was shelved by Senate Majority Leader (at the time) Mitch McConnell (R-KY).
Now with a Democrat–controlled House, Senate, and White House, advocates are hopeful that this mission could be accomplished. So far, the Biden Administration has publicly supported cancelling up to $10,000 in debt per person. This is an important step in a long-term strategy of addressing a crisis that goes beyond just giving people some extra pocket change; the measure has the potential to stimulate the economy and increase social equity for vulnerable populations. But some are worried it’s not enough to truly overcome the disastrous economic impact of student loans.
Student loans are the biggest category of debt in America, but the burden is not distributed evenly across social groups. The cost of a college education requires years of saving that is impossible for working-class families and individuals. This means that debt is concentrated in the middle and lower socioeconomic strata, impacting vulnerable borrowers the most.
This stratification is particularly disastrous for Black students. Typical Black borrowers have $7,400 more debt than their white counterparts. This debt is harder to pay off for those at the bottom; even after 20 years of making payments, Black students still owe up to 95 percent of their original loans and a shocking 37 percent of senior citizens have student loan debt in default.
Cancelling such a large amount of money would be beneficial for those unaffected by monthly payments as well. Economists predict that the increase in disposable income would stimulate spending and allow for consumers to prioritize other outstanding debts. The relief would come at an opportune time, with more than 8 million Americans falling into poverty as a result of COVID-19 since the summer and more than 80 million reporting that it was hard to cover usual household expenses in the past week, any measure to alleviate the economic downturn would help.
More than 320 advocacy groups have called on the Biden Administration to push forward on this issue, and with a COVID rescue package led by Democrats, leaders believe it’s time to make a big commitment to our nation’s economic prosperity.
“Actionable steps to address long-standing inequitable issues are within reach,” said Dr. Maria Armstrong, Executive Director of the Association of Latino Administrators and Superintendents, which joined the call. “Within the first 100 days, President Biden can narrow the opportunity gap by hitting the reset button with student loan debt.”