The graduating class of 2021 is about to say goodbye to Oswego East High School.
And it’s time that college students across the nation say goodbye to student loan debt as well.
The total amount of student debt — held by 44.7 million people — in America is $1.7 trillion.
It’s a staggering figure. In fear of becoming part of that figure, the cost of attendance is one of the biggest considerations students have when deciding where they want to complete their undergraduate studies.
According to the Education Advisory Board, almost one-fifth of students who were admitted to their top choice university in 2016 chose not to go, citing the cost of attendance as the reason. The higher the cost of attendance, the more debt students would graduate with. Graduating with student loan debt means the inability to reach certain financial milestones, apply for other loans, and put money towards retirement. When people are saddled with debt, all of their choices are made to pay it off, and as a result, they can lose major opportunities. The COVID-19 employment crisis has only added to these hardships.
Not to mention, all of this impacts our economy negatively.
When borrowers are prevented from fully participating in the economy, it suppresses consumer spending and their ability to invest their money in other things, from homeownership to starting a new business. Fewer homebuyers mean stagnant home prices. Fewer businesses mean fewer jobs. And as a consumer-based economy, when people spend less money, it decreases economic activity and slows the overall growth of the economy. It also doesn’t help that the cost of college is increasing eight times faster than wages.
On top of all of this, the student debt crisis has disproportionately impacted Black students. Data from the National Center for Education Statistics shows that 86.6% of Black students borrow federal loans to attend four-year colleges, whereas only 59.9% of white students do, since Black students have access to less generational or familial wealth. What this has resulted in is a widening in the racial wealth gap between Black and white Americans.
It’s time to take action before the consequences of student debt become even more grave.
$1.5 trillion of the $1.7 trillion student debt is in the Federal portfolio, meaning that most of the borrowers who hold debt have taken a federal student loan. What this also means is that the government has the power to change these statistics.
The government needs to cancel up to at least $50K for each borrower.
Canceling student loan debt means investing in the students. And investing in the students means investing in America’s future.
While a full cancellation would result in the best outcome, at this point in time a $50K loan cancellation would make a huge difference and would be more achievable with the current state of politics.
Progressive Democrats like Senator Elizabeth Warren and Senator Chuck Schumer are already fighting hard for the $50K student loan cancellation, along with many organizations like the American Psychological Association and the Consumer Federation of America. According to the U.S. Department of Education, canceling $50K would relieve the burden for 84% of all borrowers.
During his campaign, Biden stated he supported $10K in student loan forgiveness, and on his first day in office, he extended a pause on payments for federal student loan borrowers until September. On Thursday, April 15th, James Kvaal, Biden’s nominee for the Undersecretary of Education (the top official in charge of colleges and universities), stated that Biden has suggested thinking about a couple of different plans for loan forgiveness. The first plan would be a temporary form of loan forgiveness for people struggling during the pandemic, the second plan would be for those in public service, and the last plan would be for those with low incomes but high debt.
Biden has remained hesitant to cancel $50K of student loan debt per borrower because he doesn’t believe he has the authority to do so. Two weeks ago, the Biden administration announced that attorneys under Education Secretary Miguel Cardona would be exploring potential legal authorities to see if student loan forgiveness could be implemented through executive action. The Department of Education also stated that it would coordinate its efforts with the Department of Justice and review possible legal avenues for student loan forgiveness through executive authority.
However, the Legal Services Center of Harvard Law School consulted the framework governing federal student loan programs administered by the Department of Education at the request of Senator Warren. They concluded that debt cancellation at that amount would be a lawful and permissible exercise of Education Secretary Cardona’s power if Biden asked him to do so — which he should.
Canceling $50K in student loan debt would stimulate the economy. As per a Federal Reserve report, people who make monthly payments usually pay around $200 to $299 per month. Rather than struggling to pay off their loans, students could buy a home, create a small business, and invest in the community around them in other ways. Buying a home means more demand for home construction-related jobs. Starting a business means employing more people. Canceling student loans would be the catalyst to boosting the economy.
Student loan cancellation would also be a step closer to closing the racial wealth gap. Research from the Roosevelt Institute shows that African-American borrowers would improve their financial security and experience relative “wealth gains” if their student loans were canceled. By giving them a better ability to participate in everything mentioned previously, communities of color, and specifically lower-income households, would gain a lot from this plan.
Canceling $50K per borrower would be a great temporary solution until we figure out a way to reduce the cost of college overall. In fact, just this Wednesday, April 21st, Senator Bernie Sanders and Representative Pramila Jayapal (D-Wash) introduced the College for All Plan, which would make education free for millions and support working-class families by taxing Wall Street.
“While President Biden can and should immediately cancel student debt for millions of borrowers, Congress must ensure that working families never have to take out these crushing loans to receive a higher education in the first place,” Jayapal said.
This plan would include free tuition for all students attending community colleges and public trade schools, and tuition would also be erased for students who come from families making less than $125K annually and attend four-year colleges and universities. In addition to this, an annual $10 billion federal investment would be provided to support students at underfunded institutions. The bill would also double the Pell Grant award. And all of this would be paid for by implementing a financial transaction tax on Wall Street.
If the government can give breaks to billionaires and bail out corporations, why can’t they help regular Americans? No one should be forced to go into debt just so they can obtain a higher degree of education. Debt relief, whether it be through student loan cancellation or the College for All Plan, would open the door to many opportunities for everyone. It’s a change that would help lower-income and middle-class families and be a step towards racial justice.
With a debt crisis like the one we’re facing, individuals won’t be able to reach their full potential because they’ll be burdened by debt. President Biden needs to focus on ensuring that the youth of society can make a positive impact on this world and be in the best position to inherit it. It’s time to invest in the youth and subsequently invest in America.
Deshna Chitrarasu is a columnist for Oswego East High School’s online news magazine the Howl