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If President Joe Biden comes through on his campaign commitment to cancel student loan debt, Black families would see the greatest benefit, according to a new study. Without the burden of student loans, the Roosevelt Institute estimates Black wealth could increase by up to 40%.
Meanwhile, despite growing calls from Congress to forgive student loan debt up to $50,000, the Biden administration has declined to enact such a plan. During his campaign, Biden promised to forgive up to $10,000, although that has not yet materialized either.
However, some student loan debt has already been canceled. Borrowers from predatory schools that are now-defunct – such as Trump University – have already had their loans forgiven. Additionally, borrowers who are permanently disabled have received forgiveness on their student debt.
Addressing the racial wealth gap
But such actions do not address the millions of students who borrowed money to pay for college and universities, with student loan debt now at over $1 trillion nationally. This particularly impacts Black families, who have more debt than their white counterparts, and are more likely to have defaulted on their loans.
Recently the Roosevelt Institute, a progressive think-tank, conducted a study on student loan borrowers. The study noted that forgiving student loans “would provide more benefits to those with fewer economic resources and could play a critical role in addressing the racial wealth gap and building the Black middle class. The reason for this progressivity is simple: People from wealthy backgrounds (and their parents) rarely use student loans to pay for college.”
In fact, Black borrowers would have more debt forgiveness if the Biden administration would enact a program to forgive $50,000, as progressive plan Democrats like Senator Elizabeth Warren (D-Mass.) have called for. Black student loan borrowers would receive approximately $5000 more in forgiveness on average than White borrowers.
Additionally, Black families in the United States have seven times less wealth than White families, making the burden of debt repayment a barrier to increasing wealth through home ownership and other financial means.
According to Senator Warren, “It’s time for the administration to cancel $50,000 in student debt and give relief to people who are getting crushed.” Representative Alexandria Ocasio-Cortez (D-NY) concurred, pressuring President Biden to use his executive powers to cancel student loan debt.
Meanwhile, the Biden administration has agreed to extend the school loan repayment pause through May 2022 due to the ongoing Covid19 pandemic, which has affected students across the country.