Finally, the relief so many Americans have been waiting for has arrived recently from the Biden Administration. The President promised the American people that he would cement a decision on the federal student loan debt crisis to assist borrowers by the end of August 2022 – and he delivered upon his promise. Still, there are borrowers who contest that the Administration should have gone farther and even enclaves of Americans who don’t believe any student debt should have been forgiven at all.
There are currently 45 million Americans who are facing a cumulative $1.6 trillion dollars in federal student loan debt which has many Black borrowers under arrest – preventing too many of them from pursuing their version of the American dream. Black Americans are often at the long end of the stick as it relates to harmful public policies and that is the case as our country deals with the growing student loan crisis. According to White House economists, “[even] twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt.” That means that over a 27-year time span, these borrowers have not made any significant progress in decreasing the balance of their student loan debt. This can oftentimes stand in the path to homeownership or even the launch of businesses for borrowers who cannot escape the clutch of their student debt.
The toplines from the policy that was recently unveiled by the Administration is that non-Pell Grant borrowers will receive $10,000 in student loan forgiveness and Pell Grant borrowers will receive $20,000 in relief – this policy applies to those who earn less than $125,000 annually or $250,000 annually for married couples. Black borrowers are twice as likely to receive Pell Grants than their white counterparts. Pell Grants were designed to support low-income students while they attend college and the Biden Administration made sure to target Pell Grant borrowers who would aid in advancing racial economic equity. Some supporters of the policy still believe that the qualifying income requirements are stifling. “There are members of Congress who received PPP loans and have had those loans forgiven even though they make $174,000 a year – and now they are placing income requirements on who should receive help from the government,” said Robert Emmons, CEO of Emmons Consulting LLC. Emmons believes that “the only thing more stimulating than this recent policy is reparations.”
The long-term solution to address federal student loan debt is to lift policies that attack the rising cost of college tuition, which is inextricably linked to student loan debt. “[There are a few] solutions to student debt in America, which include supporting students with their college selections, removing predatory lenders, and truly ensuring that college is affordable for all students,” said Joseph Mason, Chief of Schools at Chicago’s North Lawndale College Prep. Justice advocates around the country are saluting the president and also thinking of additional ways that we can support those living with high levels of student debt. Ebonie Riley, DC Bureau Chief of the National Action Network believes “President Biden should send a signal to Congress to build upon his plan and give a tax credit to those who paid off their loans,” in order to expand access to this program. Riley stated that “we’re still benefitting off the work, blood sweat of the civil rights movement and we complain when things don’t move fast enough.” While this President’s plan may not be all that we expected, it is surely a step in the right direction.
College affordability is the next step to us addressing the student loan crisis. While everyone is talking about the financial rebate that is being offered to qualified borrowers, here are a few additional points on this policy that will undoubtedly have an impact on Black borrowers:
- Student loan repayments won’t restart until January 2023
- None of the canceled debt will be subject to federal income tax per a provision of the American Rescue Plan
- The plan reduces the amount that borrowers have to pay 5% of discretionary income for undergraduate loans
- Borrowers who earn a $15 minimum wage – or below – won’t have to make a monthly payment on their loans, while the interest on their loans will be paid on their behalf
- The plan will cover a borrower’s unpaid monthly interest even if their monthly payment is $0 because of low-income
This plan fulfills the President’s campaign promise to address federal student loan debt, yet more reforms can be implemented to help alleviate the burden on student loan borrowers across the country. We should celebrate this step in the long-awaited policy unveiling while also pressuring the Administration to bring American student borrowers more relief – because student loan debt in America is a crisis. For all Americans, the dream to attend college should not come accompanied by a lifetime of inescapable student debt.