By Sarah Anderson and Margot Rathke
Washington is abuzz with ideas for actions the Biden-Harris administration could take that would not require congressional approval. One of the buzziest: canceling student debts owed to the federal government.
The Department of Education owns about 92 percent of the $1.6 trillion in student loans Americans owe. Many legal scholars say the department has the authority to wipe these burdens away with the stroke of a pen.
“This is the single most effective executive action available to provide massive consumer-driven stimulus,” Senator Elizabeth Warren wrote in a Washington Post op-ed.
Back in September, Warren joined with Senate Democratic Leader Chuck Schumer to call on the next president to cancel up to $50,000 in federal student debt for every borrower in the United States. That would eliminate loan obligations for more than three-quarters of the approximately 44 million Americans with student debts.
Meleiza Figueroa is one of those many millions. The first in her family to graduate from college in the United States, she worked hard and was lucky enough to receive scholarships. But as the cost of living soared and wages stagnated, she still had to take out tens of thousands of dollars in loans.
“As a working adult in this country, I’ve had to decide between daily food, medicine, shelter, and paying off this debt — and daily survival will win out every single time,” she said on a November 13 webinar organized by the Congressional Progressive Caucus Center.
Now the national coordinator of the Student Debt Campaign, Figueroa explained that debt cancellation would help her generation “fulfill our potential and contribute not just what little we can, but the best we can to society.”
Both Figueroa and Warren point out that student debt cancellation would help narrow the racial wealth gap.
On average, Black students have to take out larger loans to get through college than their white peers. A National Center for Education Statistics study reveals that Black bachelor’s degree graduates have 13 percent more student debt than white graduates. For graduates with associate’s degrees, the debt gap doubles to 26 percent.
Black graduates also face greater challenges in paying off their student debt because of their lower average incomes. Black bachelor’s degree and associate’s degree holders earn 27 percent and 14 percent lower incomes, respectively, than whites with the same degree.
Research by the Federal Reserve and the Levy Economics Institute shows that debt cancellation would also boost the national economy. Freed up from these financial burdens, former debt holders would have more buying power to stimulate the economy — just when we need it most.
Where does President-elect Joe Biden stand?
In March he tweeted support for a legislative proposal to cancel at least $10,000 in federal student loan debt per person. “Young people and other student debt holders bore the brunt of the last crisis,” he wrote. “It shouldn’t happen again.” But so far Biden has not committed to using executive action to avoid that historic repeat.
Rep. Ilhan Omar, who has championed proposals for universal student debt cancellation and free college, is among those pressing the Biden-Harris administration to take bold action.
The mountain of student debt, she said at the CPCC event, “is the result of a two-tiered education system — one for the rich whose families can afford to pay tens of thousands of dollars for higher education and the other for poor and middle class families who have to pay off that education for the rest of their lives.”
The Biden administration will have the power to address these inequalities, Omar said. “As Americans, we are not suffering from scarcity, we are suffering from greed.”
Sarah Anderson directs the Global Economy Project and co-edits Inequality.org at the Institute for Policy Studies. Margot Rathke is an IPS Next Leader. This op-ed was adapted from Inequality.org and distributed by OtherWords.org.
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Land of no turn signals says says
How is that fair for everyone?I paid off my sons student loan.Just reimburse me what ever is settled upon.
Hope Larocque says
Sorry but I never went to college and never took out a loan I didn’t pay. If all those student loans are forgiven, why are we all paying rent, mortgages and credit card debt? So may live on a fixed income and don’t get any perks. Why someone with an education which allows them better jobs gets this I just don’t understand. Where are the perks for those who worked their whole lives and don’t get an extra $600 a week in stimulus money? Elderly people don’t get a $2400. a month increase even though it is their tax payers dollars. Something is wrong here. If we are all supposedly equal, why do they not have to repay student loans but I still have to pay a mortgage.
Jimbo99 says
Before anyone gets their student loan debt forgiven, I want a refund on student loans that I paid back in full. I had to suffer thru those lean years and pay back every penny of it, quite often as a temporary making crap wages & no benefits. Live below your means, I went without and am paying for it to this day still. Every decade has sucked. 2020 & beyond should be no different. If it was good enough for me, good enough for everyone else.
R. S. says
Way to go, Mr. Jimbo99! That’s what the last cave-person said when they tried to get him to buy into using a wheel! You do realize that if you don’t want to progress, you, too, belong with the troglodytes. ;-)
John says
A free education is worth its cost, will the professors work for free also. Stop looking for handouts, and have some pride in yourself
R. S. says
I suspect that earlier or later, we will experience significant ‘brain drain” from this country if we don’t do something to make higher education much more available to many more students than we do now. Other countries are making higher education available for free and extend this invitation also to students from the US. It doesn’t seem very constructive to exclude poorer segments of the society from advancing to their greatest level of achievement, thus opening the gap between have’s and have-not’s even wider and inviting class struggle.
Mary Fusco says
Higher education is available to all. The catch is that you have to work for it. My husband and I put 3 of our children through college. They all worked almost full times jobs while in school. i.e. One of my daughters was in Flagler College. She went to school during the day and then worked 3-11 in a hotel. Another daughter was in nursing school, she went to school and worked at our local hospital in the evening. Another was in school for paralegal She also worked in a lawyer’s office. The all maintained almost 4.0 averages. They had student loans, we had parent loans that took 13 years to pay off. I also worked 2 jobs for 10 years. We were far from rich. We had a mortgage to pay and my husband’s salary was not that large. The kids paid their student loans off and we paid our parent loans off. We were as you clasify, the have-nots and we did it. They are all very successful and we are retired. In other words, we all lived. BTW, I would like a million dollar home and have someone else pay the mortgate. LOL.
Brian Welch says
Address the overinflated tuition and useless courses offered . The billions in unused endowment s. Andrew Yangs $ 1,000 a month to every American Citizen is a better idea.
no free lunches says
Free! There is no such thing as Free. When will people understand that there is no free. Someone is paying the debt i.e. taxpayers. Why do we continue this untruth that a good or service can be provided for free???
R. S. says
Of course, someone pays: Taxpayers who realize that the investment is into the future of their country, those are who pay. The future leaders of a clean and sustainable world–those are who pay. And the ones who yammer only about their own welfare, forgetting that this world is a contingent and coherent enterprise, those will be left in the dustbin of history.
no free lunches says
Nuts!
R. S. says
The intelligentsia has the podium now. :-)
Peanut says
Like many others, I worked my way through college and have been paying my loans since…you want to blame colleges for raising rates for subpar education? I can support that..but saying future taxpayers like yourself should be let off the hook for loans you agreed to pay back so you can “contribute” to society? Not a chance…no one forced you to take the loan…conscious choice – pay it back. Basics of a free market (should have learned that in economics 101).
A Concerned Observer says
I am not at all concerned with a “Brain Drain”, but a “Deadbeat Freeloader Drain” does disturb me should this ludicrous plan ever go into effect. I feel no compulsion whatsoever to pay for someone else wishing to continue living the carefree life of a perpetual student on the dole rather than going out into the real world and work for a living. Live within your means! If you cannot afford it, do without it until you have saved enough to pay for it!
Donald Brown says
I need stimulus. Could you please cancel my mortgage and car loan.
mark101 says
A left plan that is so unfair to all the hard working people that went to college, got a job and paid off their student loan. I guess now money grow on the stroke of a pen, hell with whom really pays for this. Both of my children went to college, via my hard earned money and their student loans. They paid off their loans, with no help from the Government. Its just my opinion, but It appears these loans are for those that went to college or attempted to, now have NO job or have a minimum wage job at the Big Mac and have a GOVT loan to pay off and are crying the blues cause they spent their money on other stuff and managed their bills inappropriately. Well find a job.. IF they the Congress does this, make it retroactive back about 70 years.
Doug says
Why? Suddenly the Democrats think paying off student debt is the right thing to do? Why should working, taxpaying citizens of this country who have spent a lot of their own lives working towards retirement have to pay for a someone else’s student loans? How fair is that? It isn’t. The Democratic Party is a complete JOKE and they are determined to destroy this country.
Richard says
Why should only students get this advantage, that’s discrimination at its best by democratic hypocrites. However, if Biden comes up with a plan to payoff my mortgage debt he”ll get my vote next time. After all most of the students graduating nowadays don’t even use their field of education in their jobs or careers.
Sidewinder says
Why should my tax dollars be used to pay off “Student Loans” when the loaned money was used to pay for a useless degree? I think the colleges that allowed students to waste four years and thousands of dollars on a degree that will never allow the student to earn enough to pay back the borrowed monies, without hardship, should be made to pay back the wasted money. The colleges have Deans, student advisors and financial advisors that should have been explaining to the students that the degree being sought has no job market value and the few jobs that are available pay poorly. In fact colleges should not be permitted to offer useless degrees to students using loans to cover the cost. You want a degree that has no job market value then you should pay the cost without using loans. This situation has been created by greedy colleges and universities that profit greatly on students using loans to attend and selling degrees that have no job market value. Make the people that created this financial hardship pay, the colleges.
Pogo says
@As usual
The local branch of the selfish fools clubs, a.k.a. the Republican Party and the Libertarian Party, spring into song: ignore everything in the actual text they comment on, and bleat about I and me.
It is famously said, and often, that it is the doom of men that they forget; More often, they just shamelessly choose to forget.
A reminder of what is obviously true:
WE ALL DO BETTER WHEN WE ALL DO BETTER
By GARY CUNNINGHAM SEPTEMBER 22, 2010 — 9:51PM
“WE ALL DO BETTER WHEN WE ALL DO BETTER
It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.
Excerpt from President Roosevelt’s January 11, 1944 message to the Congress of the United States on the State of the Union…”
“…We Are Better Together
It is in our interest—all of us—to ensure that all young people graduate from high school on time and with the requisite skills to become productive citizens in our community. As Sen. Paul Wellstone so aptly stated, we all do better when we all do better.”
https://www.startribune.com/we-all-do-better-when-we-all-do-better/103588254/
Lee R. says
Free stuff escalates national debt. I’ve paid all my debts in full with no help from anyone.
When do I get my hand out? I’M WAITING…
Billy says
Just wow! Canceling her loan debt will help her generation? Canceling debt will help and grow the economy? The only valid point about canceling that generations student debt is because they learned and were taught nothing of any value at these so called colleges and if you did pay – you deserve a refund! Scary the direction this ship is sailing in – especially when you can clearly see the iceberg ahead!
Fredrick says
Another idiotic article making it seem that just “eliminating debt” makes it go away. Does that mean we take the money back from the institutions that provided the service? Or does it mean that someone else is paying for it? Think about it people. Step away from the liberal mantra just for a moment and use your own brain. It is no ones fault and but the person who took out the loan and their responsibility to pay it back. If you go out and get a useless degree such as journalism, (at least that is what it seems like these days as their are no true journalists left), or art history, liberal arts…. that costs you $200k in loans, that is not my problem. “Education” has turned into a business. It is a money making business and is supplemented by the government (read your money) and now you want take take more of our money to fund colleges for providing useless degrees. College is not for everyone and the world needs tradespeople too. You can make more money there than you can with the useless degrees being provided by “higher” education. I worked hard, paid for my own college education. If I can do it from growing up in poverty anyone can. Stop playing the victim card and take responsibility for yourself, your family and your decisions.
Concerned Citizen says
I have mixed emotions on this one. At 50 something years old I recently finished school so I could pursue a teaching career. Then Covid came along and slammed the the door on that and I have to readjust.
I used my GI Bill for most of my degree. Something that I earned. Upon honorably completing 16 years of service. And was not a hand out. I say that because someone actually told me it was a freebee recently LOL. And when the GI bill wasn’t enough I turned to financial aid and am now paying it back. I went into my degree fully expecting to be responsible for my debt. Just like any other bill. I watched my wife and mother who are now both Physcians Assistants after long careers as BSN’s pay for their’s as well. My wife will likely pay on her’s forever.
If you are going to wipe out student debt it needs to be fairly done. Not just for current students but for those who have paid already. And I see a lot of people against free education. I can see the point to a certain extent. I think personally more focus and incentive needs to be on the trades. But as long as schools remain attractive to younger genrations those useless degrees are going to be out there. Because it boils down to money. And how much the schools can leach out of families.
Shonda says
U could offered to pay back your student loans good for you..Some people like me cant offered to pay it back while being laid off due to the pandemic, u should be thanking the lord that u were able to pay it off an not having to choose between paying rent putting food on the table an paying student loan an raising 5 kids alone such as myself. Further more if u hadnt paid your debt completely out then u would be happy to receive help to…. U may have struggled to pay your debt but my struggle is i cant pay mine right now bc im not working im not as fortunate an yall who had the extra money to pay student loan right now
no free lunches says
Well, alrighty then:)
Richard says
Debt does not get “cancelled”. You and I get to pay someone else’s debt.