President-elect Joe Biden’s proposed plan to cancel some student loan debt is a good first step, advocates say, but not enough to solve the debt crisis.
Some Democrats, including Massachusetts Sen. Elizabeth Warren, have called on Biden to cancel $50,000 of federal student loan debt for borrowers. Biden is considering debt cancellation, according to Senate Minority Leader Chuck Schumer.
Bahar Akman Imboden, managing director at the Hildreth Institute, said new research has shown that student debt cancellation would help close wealth inequality gaps.
“That will help those who are extremely burdened by that now,” Imboden said, “liberating that burden, allowing them to build assets and hopefully form wealth.”
Marginalized communities, including people of color, seniors and low-income borrowers, are most affected by debt, according to Emy Takinami, policy and community organizing director at Zero Debt Massachusetts.
Canceling student loan debt would help address racial inequities and allow student loan borrowers to participate in the economy, Adam Minsky, a lawyer specializing in student loans, wrote in an email. Student borrowers often delay retirement savings and home purchases, he added.
“But, student loan forgiveness alone is unlikely to address long-term problems in higher education,” Minsky wrote, “including the high cost of college and withdrawal of public financing.”
Some have called Biden’s plan unfair to those who already paid their debts, but Takinami said this does not negate the president-elect’s moral responsibility to push for loans to be canceled.
“There’s nothing moral or reasonable about letting more people suffer just because others have already suffered,” Takinami said.
Biden plans to forgive $10,000 in loan debt for every year a borrower works in public service, for up to five years, according to his campaign website.
The average student debt in Massachusetts is $33,000, which is more than the national average, Takinami said, so some would still have debt after the $10,000 cancellation.
“Massachusetts residents, on whole, are probably thinking that $10,000 isn’t going to be enough,” she said.
Government funding for public universities in Massachusetts has decreased, Imboden said, which causes need-based aid to decrease and tuition to increase.
“Their only solution is to borrow more,” Imboden said. “So, [debt cancellation] would relieve a lot of public graduates from their debt, which is essential for the economy to grow.”
Imboden said student debt often prevents Massachusetts graduates from taking lower-paying jobs in public service.
Canceling debt is only a first step, however, according to Takinami. More needs to be done to eliminate the country’s student debt crisis at its root, he said.
“Higher education is a right and a public good,” Takinami said. “If you just cancel student loan debt, students are going to continue to accrue debt and then you are going to come back to the same problem.”
Making public higher education debt-free is necessary to rebuild the economy, Imboden said, coming out of the pandemic. She said debt cancellation would act as an “economic stimulus” for the country.
“There’s a lot of societal economic benefits of expanding that public good,” Imboden said, “and reaping the long-term benefit of having a well-educated skilled force.”