Art by Autumn Hardwick
Some Pepperdine students received news Aug. 22, when President Joe Biden announced a student loan forgiveness plan to help many individuals with student debt.
This plan is a decent start at addressing existing racial and class inequities in the U.S. higher education system, but making loan forgiveness amounts higher and providing free public undergraduate university education like some European nations could further improve the plan.
The current plan cancels $10,000 in student loan debt for debtors who make less than $125,000 annually as an individual, or $250,000 a year per household. For those coming 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 a seventh moratorium on student loan repayment will be granted until Dec. 31. After that date, the loan moratorium period will come to an end.
Of American college seniors who graduate from private nonprofit or public colleges, 62% have student loan debt, according to a 2019 study by The Institute for College Access and Success. On average, these students graduate with $29,200 in student loans, according the same study.
Allowing people to file for bankruptcy on student loan debt more easily would go a long way toward resolving the problem of excessive student loan debt, though to do so would require Congressional action — including 60 votes in the Senate to overcome a filibuster.
Greater reform requires Congressional action. As it stands, the process to file for bankruptcy on student loans is more complex than the process for other forms of debt, according to The New York Times.
As result of this policy, some individuals who have little hope of ever being able to pay off their student loans have a difficult time offloading them like they would with other forms of debt, according to CNBC and The New York Times. This issue was particularly salient after the 2008 financial crisis, when some people striving to pay back student loans battled “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 United States economy and inflation.
The United States announced Sept. 13, its Consumer Price Index inflation rate is 8.3%, according to CNN.
United States consumers face dramatic rising costs for groceries, such as a 47% increase in the price of eggs from 2021 to 2022, according to The New York Post. Granting student loan forgiveness will help families afford to put food on the table, and it is an effective bolster for economic recovery, according to The Roosevelt Institute.
There are also racial equity benefits from student loan forgiveness. Black students in the United States historically take on more college debt than white students, according to Science.org. Thus, Biden’s student loan forgiveness provides more equitable support to Black students and families dealing with a higher student loan debt burden.
Sixty-six percent of Black student borrowers left their college with debt, compared to 44% of white student borrowers. Four years after their college graduation, the average Black student loan borrower owes $53,000 and the average white student loan borrower owes only $28,000, according to CNBC.
Forty-eight percent of Black students on average owe 12.5% more in student loans than they borrowed four years after their college graduation. While 29% of Black student loan holders have monthly loan payments of $350 or more, according to the Education Data Initiative.
Further, 30% of Black families have student loan debt, compared to 20% of white families in the United States, according to Fortune Magazine. Black women in the United States on average owe 22% more student loan debt than white women in the United States, according to CNBC.
“No progress has been made in reducing income and wealth inequalities between black and white households over the past 70 years,” wrote Moritz Kuhn after a data analysis of United States’ residents’ incomes and personal wealth in 2018.
Research by Raphael Charron-Chenier and colleagues argues student loan forgiveness is a way to provide more economic relief to lower income minority individuals and their families. These researchers see student debt cancelation as a “pathway to racial equity.”
To create more racial and socioeconomic class equity, the amount of student loan forgiveness should be increased. Additionally, free undergraduate public university education should be accessible to all people in the United States.
Germany, Norway, Iceland and Austria offer free undergraduate education to their nation’s students. The United States should follow a similar example and grant American students a free undergraduate public college education too.
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