Here are 13 reasons why President Joe Biden should cancel student loans.
Here’s what you need to know — and what it means for your student loans.
Whether you support or oppose wide-scale student loan forgiveness, it’s helpful to understand the following arguments supporting broad student loan relief. As Biden weighs three important decisions for student loans, here are 13 facts that Sen. Elizabeth Warren (D-MA) and other supporters want you to know about student loan forgiveness:
1. 40% of student loan borrowers never get a degree. This means they borrow student loans but can’t access higher-income jobs to pay off student loan debt.
2. 99.7% of student loan borrowers don’t attend an Ivy League school like Harvard or Yale. Supporters say student loan cancellation won’t primarily benefit wealthier borrowers. Student loan borrowers who attend an Ivy League school aren’t necessarily wealthy or high-income earners because they graduate from a particular college or university.
3. The majority of student loans are held by households with no household wealth.
4. Student loan forgiveness is an issue of racial justice. For example, “twelve years after starting college, most Black borrowers owe more than they initially borrowed.”
5. Many student loan borrowers are in student loan default. For example, 20% of student loan borrowers are in student loan default. Of this group, 30% have been in student loan default for more than five years. Progressive members of Congress worry that restarting student loan payments would place more student loan borrowers into student loan default. Student loan forgiveness could help alleviate financial pressure.
6. The age group for which student loan debt is growing fastest is 60-69 year-olds. While this growth is on a percentage basis (not an absolute dollar basis), more parents and grandparents are borrowing student loans for their dependents to attend college. Given that this age group is at or nearing retirement, their ability to earn income to pay off student loans is limited.
7. 20% of student loan borrowers attended a for-profit college, and these student loan borrowers are twice as likely to default on their student loans.
8. Nearly 50% of all Associate degree students, on average, borrow a student loan and, on average, owe nearly $20,000 of student loans. Student loan borrowers with an Associate’s degree tend to earn less income than student loan borrowers with a bachelor’s degree.
9. Student loan cancellation could free up nearly $400 a month for student loan borrowers. Congress also has proposed 0% interest on student loans. Biden has proposed to lower interest on student loans.
10. Student loan cancellation could stimulate the economy. For example, student loan cancellation could boost GDP by $174 billion and create up to 1.5 million jobs.
11. Wide-scale student loan forgiveness also helps student loan borrowers afford to get married, start a family, buy a home, save for retirement and start a business.
12. Student loan forgiveness can reduce disparities. For example, $50,000 of student loan cancellation would “increase the wealth of Black American borrowers by 40% and close the Black-White wealth gap among borrowers by 25 percentage points.”
13. A majority of Americans support student loan cancellation. For example, a Student Borrower Protection Center poll shows that 62% of all likely voters support student loan cancellation, including a majority of young Republicans.
This is not a comprehensive list of why supporters fight for wide-scale student loan forgiveness. Supporters also say student loan borrowers need a fresh start on their student loans so they can pursue the American Dream. Without student loan cancellation and an extension of the student loan payment pause, some borrowers feel uncertain about their financial future. That said, there is plenty of opposition to student loan cancellation. Why? Stay tuned for reasons why not to cancel student loans. In the meantime, there’s no guarantee that Biden will enact wide-scale student loan cancellation. With mass uncertainty about student loan forgiveness, it’s essential to learn all your options for student loan repayment. Start with these strategies to save money:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)