Student management

Opinion: Biden’s student loan forgiveness plan doesn’t go far enough

Art by Autumn Hardwick

Some Pepperdine students received news on August 22, when President Joe Biden announced a student loan forgiveness plan to help many people in debt.

This plan is a good start to address existing racial and class inequalities in the U.S. higher education system, but increasing loan forgiveness amounts and providing free public undergraduate college education, like some European countries, could further improve the plan.

The current plan forgives $10,000 in student loan debt for debtors who earn less than $125,000 per year as an individual, or $250,000 per year per household. For those who come from low-income families who received federal Pell Grants, the plan erases $20,000 of their student loan debt, according to The New York Times.

Biden also announced that a seventh student loan repayment moratorium will be granted until December 31. After this date, the loan moratorium period will end.

According to a 2019 study by the Institute for College Access and Success, among American college seniors who graduated from private, nonprofit or public universities, 62% have student loan debt. On average, these students graduate with $29,200 in student loans, according to the same study.

Making it easier for people to file for bankruptcy on their student loan debt would go a long way to solving the problem of excessive student loan debt, though it would require congressional action — including 60 votes in the Senate to overcome a filibuster.

Greater reform requires congressional action. As it stands, the process for filing for bankruptcy on student loans is more complex than the process for other forms of debt, according to The New York Times.

Because of this policy, some people who have little hope of ever being able to repay their student loans are finding it difficult to discharge them as they would with other forms of debt, according to CNBC and The New York Times. This issue was particularly prominent after the 2008 financial crisis, when some people struggling to repay their student loans struggled with “a minimal standard of living”, according to The Educational Credit Management Corporation.

Biden’s student loan forgiveness plan is a valid course of action to help families deal with rising costs given the uncertain state of the economy and inflation in the United States.

The United States announced on September 13 that its consumer price index inflation rate was 8.3%, according to CNN.

American consumers are facing a dramatic increase in grocery costs, such as a 47% increase in the price of eggs from 2021 to 2022, according to the New York Post. Providing student loan forgiveness will help families afford to put food on the table, and it’s effective support for economic recovery, according to the Roosevelt Institute.

Canceling student loans also has racial equity benefits. According to Science.org, black students in the United States historically carry more college debt than white students. Thus, Biden’s student loan forgiveness provides more equitable support for black students and families struggling with higher student debt burdens.

Sixty-six percent of black student borrowers left college with debt, compared to 44% of white student borrowers. Four years after graduating from college, the average black student borrower owes $53,000 and the average white student borrower owes just $28,000, according to CNBC.

Forty-eight percent of black students owe an average of 12.5% ​​more in student loans than they borrowed four years after graduating from college. While 29% of black student loan holders have monthly repayments of $350 or more, according to the Education Data Initiative.

Additionally, 30% of black families have student loan debt, compared to 20% of white families in the United States, according to Fortune Magazine. According to CNBC, black women in the United States have on average 22% more student loan debt than white women in the United States.

These patterns show a racial gap in student loan debt driven by the racial wealth gap and economic inequality in America.

“No progress has been made in reducing income and wealth inequality between black and white households over the past 70 years,” Moritz Kuhn wrote after an analysis of data on residents’ incomes and personal wealth. of the United States in 2018.

Research by Raphael Charron-Chenier and his colleagues supports that student loan forgiveness is a way to provide more economic relief to low-income minority people and their families. These researchers see student debt forgiveness as a “pathway to racial equity.”

To create more racial and socio-economic class equity, the amount of student loan forgiveness should be increased. Additionally, free public undergraduate university education should be available to everyone in the United States.

Germany, Norway, Iceland, and Austria offer free undergraduate education to students from their countries. The United States should follow a similar example and grant American students free education at public undergraduate colleges as well.

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Email Joshua Evans: [email protected]