Credit: Charlie Eaton.
Chances of student loan forgiveness have never been so great experts say… However, this path faces a number of serious obstacles, both practical and ideological.
Does the president have the authority to cancel the debt? Officials from the US Department of Education and the US Department of Justice are currently trying to find answers to this question.
If they come to the conclusion that President Joe Biden can do it, right? And if they decide he isn’t doing it, will the Democrats, despite their tiny majority, be able to pass a law that forgives student debts?
Meanwhile, at the center of the ideological debate is the question of who really benefits from the anniversary. room critics of the wide student loan forgiveness say the policy will channel taxpayer dollars to people who are already relatively well off, as higher education diploma leads to higher earnings…
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Biden also questioned the fairness of student debt write-offs, repeatedly naming borrowers more privileged than others… “The idea that you go to Pennsylvania and pay a total of $ 70,000 a year and the public has to pay for it? Biden said in an interview with The New York Times in May. “I do not agree”.
And back in February, at CNN’s town hall, Biden said it made no sense to cancel loans “for people who went to Harvard, Yale and Penn.”
Now a group of scholars from the Roosevelt Institute, a progressive think tank, have published to investigate they hope to change the minds of Biden and other critics when it comes to student loan forgiveness.
Their main finding is that canceling $ 50,000 for all student loan borrowers would result in a loss of more than $ 17,000 per person among black households in the poorest 10%, and more than $ 11,000 among white and Hispanic households in this very same low range.
Meanwhile, the average cancellation will be just $ 562 per person for those in the 10% richest fortune.
In other words: the anniversary will benefit the poor the most.
CNBC spoke this week with Charlie Eaton, an economic sociologist and co-author of the report, on his findings and how he hopes they will influence the ongoing debate about student loan forgiveness. (Interview has been shortened and edited for clarity.)
Annie Nova: Where do you think the idea came from that forgiving student loans would help wealthy people?
Charlie Eaton: Part of the myth that cancellation can help wealthy people comes from the original theory that was used to justify student loans: People are better off borrowing to go to college than not going at all. People are committed to this model and justify it as something that promotes fairness.
AN: You write that the race is a “blatant omission” in the argument against student loan forgiveness. Why do you think the race was ignored?
CE: Over the past decade, many of the most revolutionary work has been done on income inequality. I think the newness of this knowledge is part of that. But there was also a willful disregard for racial inequality by those people who wanted to see student loans as an easy way to pay for higher education in America instead of adequate taxes and expenses.
AN: You talk about student loan forgiveness as a form of racial compensation. Why?
CE: Forgiving a student loan would be just a small first step towards reclaiming the economic legacy of slavery and Jim Crow. But black borrowers must be empowered to accumulate wealth because black students who go to college borrow money at much higher rates than white borrowers. As a result, it is much more difficult for them to get a mortgage and accumulate savings.
AN: Your report expresses doubts about the effectiveness of narrower student loan forgiveness policies, such as those aimed at low-income borrowers. Why do you think broader cancellation is the right way to go?
CE: If you try to impose these exceptions, you are at greater risk of not rectifying the injustice created by our student loan system. For example, if you were only going to use income and said that we were not going to cancel student loans for people who earn more than $ 75,000 a year, you would rule out the disproportionate number of black professionals who may have income. at this level, but they have much more student debt than their white counterparts.
AN: What do you think is the biggest obstacle to canceling student loans?
CE: Joe Biden. He seems to have embraced this myth that writing off student debt disproportionately helps wealthier people when the opposite is true. He said it would be unfair to write off debts from those who attended Harvard, Yale, or Pennsylvania. The fact is that Harvard has, in fact, already written off the debts of its students: only 3% of Harvard students have any student loan debt at all. I hope our research gets to Biden to help him understand that student debt cancellation will go to those in need.
AN: Do you know if anyone in the Biden administration saw your research?
CE: We shared our work directly with White House and Ministry of Education staff. And we hope the Biden administration is seriously considering the president’s ability to write off student debt.
The White House did not immediately respond to a request for comment.