David Hecker: Here’s why canceling student debt matters
For decades, teenagers have been sold a version of the American dream centered around college education: They’ll go to school, graduate with a degree, and find enough success in their chosen field to pay off their debts and thrive financially.
Parts of this are true, and some lucky few may have this exact experience — but many more are facing a grim reality totally at odds with the bright future they were promised.
Tuition costs have steadily grown while wages have remained stagnant, and the old approach of working one’s way through school is less and less attainable, forcing students to resort to loans. Even those who graduate and find a good job in their field are saddled with debt they may spend decades paying off.
Our lawmakers have the power to relieve this burden, make strides toward closing the racial wealth gap, and preserve higher education as an opportunity for all, rather than a privilege for those who can afford it. It is imperative that they act to cancel student debt — and beyond that, to look toward long-term solutions at the federal and state levels to make higher education more affordable and accessible for all.
Unfortunately, there are many common misconceptions that muddle discussions about the issue of debt cancellation, but the actual data shows that canceling debt, without any sort of means test, is a progressive policy that will make a world of difference for communities that have been disadvantaged for too long.
A 2021 analysis by the Roosevelt Institute took a deeper dive into the issue and attempted to address some of the myths around student debt. As one might expect, students who come from low-income households are far more likely to graduate with federal student loan debt compared to those from a wealthier background. There’s also a significant racial gap, with 74% of Black students graduating with federal loan debt compared to 55% of white students.
These inequities cause a snowball effect — student loan debt, which includes much more than the original amount borrowed thanks to interest, makes it difficult to build wealth, which feeds into long-standing patterns of wealth inequality as the gap between rich and poor, and the racial gap that comes with it, continues to widen.
Means testing debt cancellation, suggested by some, ends up creating too many hoops to jump through for people who would otherwise qualify. Additionally, the racial wealth gap is at its highest among the upper-middle class, so including an income cap would do little to close the racial wealth gap. It’s also worth noting that means testing via income could exclude higher-income households that still lack generational wealth, which is especially common among Black professionals. All of these issues make means testing an ineffective way to achieve a progressive policy.
For some borrowers, it’s already too late — they’ve paid their debts, and I share their frustration about the impact that has had on their ability to build wealth. But refusing to help those who are currently struggling won’t do any good for those who struggled with debt in the past — the only acceptable option is to chart a better path forward for all students seeking higher education.
Under President Biden, we’ve taken some important steps toward debt relief, with more progress hopefully on the horizon. Recently, the Biden administration announced the largest act of federal debt cancellation in history, erasing more than $5 billion in debt for the hundreds of thousands of students who were defrauded by predatory, for-profit Corinthian colleges. This isn’t the administration’s first act of debt cancellation — so far, they’ve canceled $25 billion in debt with targeted initiatives that have affected more than a million borrowers.
The administration’s effort to cancel debt is good. But some Democrats in Congress are thinking even bigger, with a plan championed by U.S. Sen. Elizabeth Warren (D-Mass.) that would cancel up to $50,000 in federal student loan debt for those affected through executive action.
As president of an educators’ union, it’s no secret that I believe in the power of education, both as an avenue to personal success and as a social good in and of itself. We must work together to create a better system and a brighter future for all students, and that starts with debt cancellation.
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