Here are 13 reasons why President Joe Biden should cancel student loans.
Here’s what you need to know — and what that means for your student loans.
Whether you support or oppose broad-based student loan forgiveness, it is helpful to understand the following arguments in favor of general student loan relief. As Biden weighs three major student loan decisions, here are 13 facts Sen. Elizabeth Warren (D-MA) and other supporters want you to know about student loan forgiveness:
1. 40% of student borrowers never graduate. This means that they borrow student loans, but cannot access higher income jobs to pay off their student debt.
2. 99.7% of student borrowers do not attend an Ivy League school like Harvard or Yale. Proponents say canceling student loans won’t primarily benefit wealthier borrowers. Student borrowers who attend an Ivy League school are not necessarily wealthy or high-income because they graduated from a particular college or university.
3. The majority of student loans are held by households without wealth.
4. Student loan forgiveness is about racial justice. For example, “twelve years after starting college, most black borrowers owe more than they originally borrowed.”
5. Many student borrowers are in default. For example, 20% of student borrowers are in default. Of this group, 30% have been in default for more than five years. Progressive members of Congress fear that restarting student loan repayments will put more student borrowers in default. Canceling student loans could help ease financial pressure.
6. The age group for which student debt is increasing most rapidly is 60 to 69 years old. Although this growth is expressed as a percentage (not absolute dollars), more and more parents and grandparents are borrowing student loans to get their dependents to attend college. Since this age group is or is about to retire, their ability to earn income to repay student loans is limited.
seven. 20% of student borrowers attended a for-profit collegeand these student borrowers are twice as likely to default on their student loans.
8. Nearly 50% of all undergraduate students, on average, borrow a student loan and, on average, owe nearly $20,000 in student loans. Student borrowers with associate’s degrees tend to earn less than student borrowers with bachelor’s degrees.
9. Canceling a student loan could free up nearly $400 per month for student borrowers. Congress also proposed 0% interest on student loans. Biden has offered to cut interest on student loans.
ten. Student Loan Cancellation could stimulate the economy. For example, canceling student loans could increase GDP by $174 billion and create up to 1.5 million jobs.
11. Large-scale student loan forgiveness also helps student borrowers afford to get married, start a family, buy a home, save for retirement, and start a business.
12. Canceling student loans can reduce disparities. For example, a $50,000 student loan forgiveness “would increase the wealth of black American borrowers by 40% and reduce the black-white wealth gap among borrowers by 25 percentage points.”
13. A majority of Americans support canceling student loans. For example, a Student Borrower Protection Center poll shows that 62% of all likely voters support student loan forgiveness, including a majority of young Republicans.
This is not an exhaustive list of the reasons proponents are fighting for large-scale student loan cancellation. Proponents also say student borrowers need a fresh start on their student loans so they can pursue the American dream. Without student loan forgiveness and an extension of the student loan payment pause, some borrowers feel uncertain about their financial future. Above all, there is no guarantee that Biden will embrace large-scale student loan cancellation. That said, with massive uncertainty about student loan forgiveness, it’s essential to know all of your student loan repayment options. Start with these money-saving strategies: