Courtesy: Charlie Eaton
The likelihood of student loans being granted has never been higher, experts say. Yet there are a number of major obstacles, some practical, some ideological.
Does the President have the authority to cancel the debt? US Department of Education and Justice officials are currently trying to find answers to this question.
If they conclude that President Joe Biden can do this, will he? And if they decide he doesn’t, will the Democrats, despite their wafer-thin majority, manage to pass a law that removes student debt?
At the center of the ideological debate is the question of who would really benefit from an anniversary. A number of critics of widespread student loan forgiveness say the policy would channel taxpayers’ money to people who are already relatively wealthy, as college degrees lead to higher incomes.
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Biden has also questioned the fairness of student debt forgiveness, categorizing borrowers as privileged several times more recently than others. “The idea that you should go to Penn and pay a total of $ 70,000 a year and the public should pay for it?” Biden said in a May interview with the New York Times. “I do not agree.”
And in February, Biden said at a CNN town hall there was no point in canceling the loans “for people who went to Harvard and Yale and Penn.”
Now, a group of scientists from the Roosevelt Institute, a progressive think tank, has released research that they hope will change the minds of Biden and other critics when it comes to student loan forgiveness.
Their biggest finding is that the cancellation of $ 50,000 for all student loan borrowers has increased more than $ 17,000 per person for black households in the lower 10% of net worth and above $ 11,000 for white and Latinx households in this one would wipe out the lowest area.
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Meanwhile, the average cancellation would be just $ 562 per person for those in the top 10% of net worth.
In other words, an anniversary would benefit the least wealthy the most.
CNBC spoke to Charlie Eaton, an economic sociologist and one of the report’s authors, this week about the findings and how he hopes they will influence the ongoing debate on student loan issuance. (The interview has been shortened and edited for the sake of clarity.)
Annie Nova: Where do you think you got the idea that student loan waivers would help those who are wealthy?
Charlie Eaton: Part of the myth that quitting would help wealthy people stems from the original theory used to justify student loans: that individuals are better off borrowing to go to college than not to go to college at all . People are committed to this model and justify it as something that promotes justice.
Student loan waivers would be just a small first step towards restoring the economic legacy of slavery and Jim Crow. But it is necessary.
AN: You write that race is “a blatant omission” in the arguments against student loan forgiveness. Why do you think the race was skipped?
THESE: Much of the most seminal work on wealth inequality has been written over the past decade. I think the novelty of this knowledge is one of them. But there was also a deliberate ignorance of racial inequality from people who wanted to see student loans as an easy way to get their college education in America in lieu of decent taxes and expenses.
AN: You talk about student loan forgiveness as a form of racial reparation. Why?
THESE: Student loan waivers would be just a small first step towards restoring the economic legacy of slavery and Jim Crow. But it is necessary to enable black borrowers to build wealth because black college goers borrow at much higher rates than white borrowers. As a result, it is much more difficult for them to get home loans and accumulate savings.
AN: Your report raises doubts about the effectiveness of tighter student loan waiver guidelines targeting, for example, low-income borrowers. Why do you think a broader rejection is the right way to go?
THESE: If you try to overlay these exclusions, there is a greater risk that you will not be able to reverse the injustices created by our student loan system. For example, if you were only going by income and you said we weren’t going to cancel student loans for people making more than $ 75,000 a year, you’d be excluding the disproportionate number of black professionals who might have an income on at this level, but also have a lot more student debt than their white counterparts.
AN: What do you see as the biggest challenge when canceling student loans?
THESE: Joe Biden. He seems to have accepted the myth that student debt relief disproportionately helps wealthier people when the opposite is the case. He said it wasn’t fair to get people who went to Harvard or Yale or Penn off their debts. The thing is, Harvard has essentially already canceled debt to its students: only 3% of Harvard students have any debt on a student loan at all. I hope our research will reach Biden to help him understand that student debt relief will flow to those in need.
AN: Do you know if anyone in the Biden administration has seen your research?
THESE: We shared our work directly with White House and Education Department staff. And we are optimistic that the Biden administration is seriously examining the president’s ability to cancel student debt.
The White House did not immediately respond to a request for comment.