By Demetrius Dillard
President Joe Biden’s administration recently announced a comprehensive three-part plan to provide extensive student loan relief that will impact millions of American borrowers.
Since Biden has been at the helm over the past 20 months, this legislative action is regarded as the most wide-ranging and expansive — besides perhaps the Infrastructure Bill — and is being lauded by many, while it has raised concerns for others.
Over the course of his campaign in 2020, Biden’s promise to deliver student loan debt relief for countless Americans seemed to stand out as a defining quality. That particular component of his campaign trail was particularly intriguing for recent college graduates, many of whom are in a mountain of debt.
Given the adverse effects the pandemic has had on the job market (which is finally beginning to recover), along with the rising costs for college and dreadful stage of inflation the country is facing, it seems that student loan forgiveness legislation could not come at a better time.
“President Biden is announcing a three-part plan to provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic,” says a fact sheet released by The White House on Aug. 24.
“This plan offers targeted debt relief as part of a comprehensive effort to address the burden of growing college costs and make the student loan system more manageable for working families.”
According to the Biden Administration, the Department of Education will:
- Provide targeted debt relief to address the financial harms of the pandemic, providing up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients for borrowers whose individual income is less than $125,000 ($250,000 for married couples).
- Make the student loan system more manageable for current and future borrowers by reducing monthly payments in half for undergraduate loans in addition to “fixing the broken Public Service Loan Forgiveness (PSLF) program by proposing a rule that borrowers who have worked at a nonprofit, in the military, or in federal, state, tribal, or local government, receive appropriate credit toward loan forgiveness.
- Protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices.
The plan is expected to provide debt relief to up to a whopping 43 million borrowers and cancel the remaining balance for approximately 20 million borrowers.
As part of this debt cancellation initiative, The White House also noted an eye-catching outcome, which is to “advance racial equity.” “About 16% of borrowers are in default – including nearly a third of senior citizens with student debt – which can result in the government garnishing a borrower’s wages or lowering a borrower’s credit score,” says the Biden Administration Fact Sheet. “The student debt burden also falls disproportionately on Black borrowers. 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.”
The part that wasn’t on the fact sheet was that multiple states could tax student loans forgiven under Biden’s new plan, according to multiple reports.
Nonetheless, there has been a great deal of media coverage and commentary surrounding the effect the plan will have on Black borrowers, who suffer worse as it relates to the student loan debt more than their other racial counterparts.
According to federal education data cited by the Associated Press, Black borrowers carry around $40,000 in student loan debt, roughly $10,000 more than their White counterparts. The AP report goes on to highlight a harsh reality that “one in four Black borrowers would see their debt cleared entirely under the administration’s plan.”
There are numerous factors that contribute to the disparity in student loan debt, which is a whole separate story in itself.
But considering that only a fourth of Black borrowers are expected to see their debt wiped away under the new plan, are there any other initiatives, strategies or measures under consideration by President Biden that will enable a larger percentage of Black borrowers to have their debt cleared? Is this plan truly a step toward advancing racial equity?
Megan Sauer of CNBC pointed out some thought-provoking details in a piece she wrote entitled “Student debt experts say $10,000 isn’t enough specifically for Black borrowers—here’s why.”
Sauer quoted college graduates and academic professionals while citing research from the Brookings Institute and Education Data Initiative. Four years after graduation, the average Black borrower owes $53,000, while the average White borrower owes $28,000, according to data collected by the Brookings Institute.
“Statistics like that lead some experts to say that Black borrowers specifically need more than $10,000 in loan forgiveness,” Sauer wrote. While some are doubtful, despondent and skeptical, many others are optimistic of how everything will materialize. Regardless of how anyone feels, one thing is for certain: Time will tell if this plan will truly “advance racial equity” as the Biden Administration pledged it will.
