As Congressional Democrats release plans to forgive federal student loans, President Joe Biden signals he is supportive, but by how much remains a question.
Senate Majority Leader Chuck Schumer, alongside progressive Democratic members of the House and Senate, held a news conference Thursday pushing Biden to forgive up to $50,000 in federal student loans per borrower. Schumer and other Democrats have called on Biden to use an executive order to issue the forgiveness.
“This is an issue that climbs all the way up, not just 20 year olds and 30 year olds, but there are 40 year olds and 50 year olds,” Schumer said. “A lot of the parents have the debt. They would get relief. We got to get this done."
Biden, however, has shown an apprehensiveness to forgiving this amount of student loan debt. Biden has said he would consider forgiving $10,000 in student loans per borrower via executive action.
Biden's use of executive orders, however, has come under fire from some Republicans.
"President Biden talked about unity. He said if we're united we can do great things. And then he turned around and put out 25 executive orders," said Sen. John Barrasso, R-Wyoming.
The White House has signaled that it may be supportive of a larger forgiveness package if approved by Congress.
“The President continues to support the canceling of student debt to bring relief to students and families,” Jen Psaki, White House Press Secretary, said. “Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress.”
Getting legislation through Congress, however, could be a challenge. Republicans have not signaled any support for forgiving substantial amounts of student loan debt.
Since taking office, Biden has pushed a forbearance on federal student loan payments until after September 2021. Federal student loan borrowers had their loans placed on forbearance in March 2020 by the Trump administration at the onset of the coronavirus pandemic. When President Donald Trump left office, a forbearance was in place through the end of January.
Advocates say Black borrowers would benefit the most
According to 2016 federal government data, the average Black bachelor’s degree graduate had nearly $25,000 more in student loan debt than white graduates four years after graduating. Four years following graduation, Black graduates owe 6% more than they borrowed on average, while white grads owe 10% less than they borrowed.
Some of this is due to the pay disparity between white and Black college graduates. White college graduates had a median income of $40,000 per year, versus the median income of $36,000 per year for Black college grads, according to 2016 data from the Journal of Blacks in Higher Education.
"This pandemic has made it all, but impossible to ignore the fact that we can and we must take bold action to address the inequities and disparities in our country and provide much needed relief to our communities,” Rep. Ayanna Pressley, D-Mass, said on Thursday. “Canceling student debt by executive action is one of the most effective ways with the stroke of a pen that we can provide sweeping relief to millions of families, help reduce the racial wealth gap and begin to build the groundwork for an equitable and just long-term recovery."
Impact of canceling student loans
The nonpartisan Congressional Budget Office released data indicating that America’s student loan debt had increased by 700% during the period from 1995 through 2017.
The CBO lays out a number of reasons why this has happened. One culprit is that borrowing from private, for-profit colleges has skyrocketed. Adding insult to injury, those who attend for-profit colleges and universities are more likely not to graduate, resulting in fewer job opportunities.
The CBO also says that enrollment increased at universities across America through the late 90s and 00s, meaning there were simply more students to go into debt. The number of students taking out new loans did subside some after a 2011 peak, but remained higher in 2017 than they did in the 90s and much of the 00s.
There has also been an arms race at universities to increase services to students, which increases costs. This comes while state support for public universities has decreased in recent years.
College grads still fare better overall
Despite all of the debt many college graduates face in the years, and even decades, after attending school, those with bachelor’s degrees or higher fare much better in the job market.
According to the US Census’ 2019 data, the median income for a householder with a bachelor’s degree was $51,036, with those with advanced degrees making even more. For those with an associate’s degree, a degree generally given to community college graduates, the median income was $34,242. Those who attended some college, but did not have a degree, earned $33,380 a year, while those who were high school graduates without college experience earned $26,803.
During the height of the pandemic, those with at least a four-year college degree were more likely to hang on to their job. The unemployment rate increased from 2.5% to 8.4% for those with a bachelor’s degree from March to April of 2020. Those with an associate’s degree or some college experience, but not a four-year degree, saw an unemployment rate increase from 3.7% to 15%.
For those who graduated high school but did not attend college, the unemployment rate during the same period jumped from 6.8% to 21.2%.
The most recent job figures,which were for the month of December, showed an unemployment rate of 3.8% for those age 25 and over with at least a four-year degree, 6.3% for those with an associate’s degree or some college, and 7.8% for those with a high school diploma and no college experience.