With president-elect Joe Biden’s inauguration approaching, the chorus is growing for the new administration to take action on canceling the $1.7 trillion owed in student loans.
Debt cancellation is an urgent matter of equity that Biden can achieve with an executive on the first day of his presidency, says Remington A. Gregg, counsel for civil justice and consumer rights at Public Citizen, a consumer advocacy group.
“Narrowing the racial wealth gap seems to be a very big priority for president-elect Biden,” Gregg says. “This would be one of the fastest ways to do that.”
Under the Biden-Harris higher ed platform, individuals making $25,000 or less per year would not owe any payments on their undergraduate federal student loans and also won’t accrue any interest.
All other borrowers would pay 5% of their discretionary income over $25,000 toward their loans. After 20 years, borrowers who have made payments responsibly will have their remaining debt forgiven.
Black students often borrow more than do white students to attain a college degree, making it harder to start a family, buy a home or save for retirement, Gregg says.
Canceling debt would also stimulate the economy as the country tries to recover from the COVID economic crisis.
“This is the second recession that millennials have been a part of,” he says. “Imagine if you had that $1.7 trillion back, what that would do for the economy.”
Canceling debt should also motivate colleges and universities to lower the costs of degrees that are increasingly necessary to financial success. There’s also more pressure to get a diploma from a prestigious institution, Gregg says.
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“We have an entire generation who grew up with people saying the only way to get ahead is to go to college,” Gregg says. “You could choose to go to community college and not go to Harvard but we know that in our society, people look at resumes and say ‘Oh, you went X and this other person went to Harvard. This other person must be smarter.'”
The two recessions have also left students with degrees, debt and weaker job prospects than previous generations. Another 40 percent of borrowers in default weren’t able to earn a degree in six years.
“A whole generation of people got out of school and couldn’t find a job through no fault of their own,” Gregg says. “Congress should take responsibility for making college more affordable. Let’s not put this on students who are simply trying to get an education—they don’t make the big bucks, they don’t make the decisions that impact millions of lives.”