Student borrowers have a staggering $ 1.6 trillion in debt – $ 1.37 billion that the federal government owns. Before the federal government suspended student loan payments under the spring coronavirus stimulus package, one person was in default on their student loan every 26 seconds, according to the Student Borrower Protection Center.
By 2021, borrowers are expected to hold $ 2 trillion in student debt. Millions of people struggle to pay for their basic necessities and meet their credit obligations. The health and economic crisis caused by the coronavirus has made the situation worse. Unemployment among African Americans is nearly double the unemployment rate for whites, and more than 8 million people have fallen into poverty as of May 2020, the New York Times reported.
Black and Latinx people are forced to borrow at higher interest rates and in larger amounts because of racial inequality in income and wealth. According to a study, 20 years after college, the middle white borrower paid off 94% of the debt while the middle black borrower still owed 95%.
The reasons are simple: these borrowers have to borrow more because they have fewer family assets and get paid less after graduation, making it harder to repay their loans. By canceling student debt, Biden could close the black-and-white wealth gap for families with student loans by 25% and the Latinx-white gap for borrower families.
Opponents of student debt relief claim it would be a godsend for the privileged like doctors and lawyers who hold large amounts of student debt. But the data shows the exact opposite. According to a New York Times story, those with the least amount of debt are more likely to default.
For example, those who left school before graduation because they couldn’t afford further education or had too many family commitments still have to pay back their loans. Without a degree, these students often take on low-wage jobs that make it impossible to repay loans.
By canceling student debt, families have more money to meet their basic needs, afford a car, or save up for retirement. It would also give those who have delayed getting married and having children the opportunity to do so. A recent study showed that millennials spend less money 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 it would be too expensive to cancel student debt. Recent analysis suggests that the federal government will lose $ 435 billion of the $ 1.37 trillion in its student loan portfolio – meaning millions of those loans will default and put their personal credit history at risk.
Instead of further harming these troubled borrowers, let us boost our economies and fight injustice by canceling all of the $ 1.6 trillion student debt owed – including buying and extending personal loans – and giving these people a chance to achieve economic security to build for themselves and their families.
Finally, President Donald Trump’s Secretary of Education, Betsy DeVos, argued that canceling student loans would be unfair to those who have already paid their debts or have never gone to college. But that totally misses the point that society works for the common good. I made a choice 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 refund my money? Of course not, because I proudly contribute to making society better for everyone.
Not only would the student debt cancellation be a lifeline for 45 million people, some of whom are suffering from the burden of their debts, it would also help build a more resilient economy. It is supported by a majority of Americans, according to Forbes. And it fulfills the commitment so many leaders made over the past year to focus on racial justice by working to close the racial wealth gap and giving black and brown borrowers a real chance at success.
In the end, Biden should do it because it is the right thing to do.
Remington A. Gregg is the civil justice and consumer rights counsel for Public Citizen (citizen.org), a not-for-profit, progressive consumer rights advocacy and think tank based in Washington, DC
source https://collegeeducationnewsllc.com/pro-con-canceling-student-loan-debt-would-narrow-the-racial-wealth-gap-stimulate-our-economy/
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