By: Richard Cruz Davila

As of April 2021, the total amount of student loan debt held by borrowers in the United States was over $1.7 trillion, up from $905 billion at the same point in 2011. Further, in 2009, the percentage of student loan borrowers in the United States whose balance exceeded the original amount of their loans was around 25%. In ten years, that number more than doubled to around 58%. Statistics such as these have sparked public debate about how best to solve the emergent student debt crisis.

It is necessary, however, to disaggregate these data to understand which borrowers are most impacted by student loan debt. In 2009, for instance, the percentage of White borrowers whose current balance exceeded the original amount of their loans was about the same as the national average, whereas almost 30% of Latina/o borrowers and over 37% of African American borrowers owed more than they had originally borrowed. By 2019, the percentage of White borrowers who owed more than they had borrowed doubled to 50%, which, though a dramatic increase, was still around eight percentage points lower than the national average. By comparison, Latina/o borrowers were slightly above the national average at 60%, and the total percentage of African American borrowers who owed more than the original amount of their loans soared to nearly 75%. These disparities show that addressing the student debt crisis is a matter of racial justice.

One strategy to address the crisis that has become part of public discourse is student loan cancellation. During the Democratic primary race for the 2016 presidential nominee, progressive Democratic candidates such as Senators Elizabeth Warren and Bernie Sanders amplified the cause of student loan cancellation. Sanders vowed in his campaign to cancel all existing student loan debt, while Warren offered a modest proposal of canceling up to $50,000 for 95% of student loan borrowers. At the time, Vice President Biden opposed large-scale student loan debt cancellation, but pushed on the issue by his primary opponents he promised instead to immediately cancel up to $10,000 of student loan debt for all borrowers under a COVID-19 student loan forgiveness plan.

Yet, nine months into his presidency, Biden has yet to make significant gains on this promise, although he has asked Congress to pass legislation canceling up to $10,000 per borrower. Under the Biden administration, the Department of Education (ED) has so far forgiven almost $10 billion of student loan debt for over 500,000 borrowers, with benefits going to those with total or permanent disabilities, U.S. service members deployed to combat zones, and borrowers defrauded by for-profit colleges and universities. The amount of debt canceled thus far is less than 1% of the $1.7 trillion owed by all borrowers and benefits less than 1% of the 44 million Americans with student loan debt. During the pandemic, many more borrowers have found temporary relief through suspensions of payments and interest on certain types of federally owned student loans, but Biden remains resistant to large-scale debt cancellation.

Meanwhile, the lack of strident steps by the Biden administration mean that Black and Brown borrowers continue to be disproportionately impacted by the debt crisis nationally and in Michigan. In a March 2021 report from the Michigan Journal of Public Affairs, Kyle Southern and Charles Davis note that in Michigan student loan debt has increased by 71% for African American borrowers and 139% for Latina/o borrowers in the past ten years. Nationally, Black and Brown borrowers are significantly more likely to default on their student loans. Of African American borrowers who started college in the 2003-2004 school year, 55% of men and 45% of women had defaulted on their loans within 12 years, and 35% of Latina/o men and women had defaulted within 12 years, compared to only 21% of White men and women. As such, for many African American and Latina/o borrowers whose debt prevents them from buying homes or starting businesses, a college education may exacerbate rather than alleviate racial wealth gaps.

It is therefore crucial that the Biden administration take immediate action to relieve the burden of debt that holds back an entire generation of borrowers and to implement policies to reduce dependence on student loans for the current and future generations of students. Such action would signal that Biden is sincere in his promises to address systemic racial inequality. Not surprisingly, a Freedom to Prosper poll found that a large majority of student loan debt holders support debt cancellation. The poll also found the strongest support among voters under the age of 44 and among Black and Latina/o voters, who are key supporters of Democratic candidates. Although Republicans claim that President Biden does not have the authority to cancel debt and pressure him to resist calls to cancel student debt by executive action, he continues to examine whether or not he has authority to do so.