If Biden can cancel some student debt, he can cancel all student debt in the US

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“I co-signed for 70,000 loans to enroll my disabled grandson in a private college that would meet his specific needs,” said a 70-year-old debtor I met at the Debt Collective event . virtual meeting of former debtors in mid-August. “I don’t think I will be able to repay these loans in my lifetime,” another debtor told me.

Listening to these stories in a Zoom breakout room, I couldn’t help but feel overwhelmed by the conclusion that debt controls the lives of millions of people in the United States, especially the most vulnerable. The Debt Collective, the nation’s premier debtors’ union, is known for opening and hosting powerful conversation forums that allow people to break free from the burden of shame and talk about the impact debt has had on their lives. I’ve been organizing with Debt Collective for a year and come back with the same conclusion every time I leave an assembly: Americans desperately need full cancellation, and they need it now.

On August 24, President Biden announcement a groundbreaking decision to forgive $10,000 in student debt for all borrowers earning less than $125,000 per year. Americans who received a Pell Grant will be eligible for a $20,000 waiver, a move intended to target the most vulnerable. The administration’s decision to forgive up to $20,000 in student loan debt, including graduate and Parent Plus loans, will transform the lives of millions of Americans. In addition, the moratorium will be extended until December 31, income-tested repayment plan payments will drop to 5% of discretionary income, and changes will be made to the public student loan forgiveness program. Around 20 million borrowers will have their debt wiped off entirely, giving them more room to pay day-to-day bills such as rent, food and utilities. But for the other 25 million Americans who will only see a portion of their loans forgiven, will this plan be enough to have a significant and lasting impact? For most, the answer is no.

For many people, reversing $10,000 won’t even dent their balance. Borrowers with high debt-to-equity ratios – those who live paycheck to paycheck, who worry about making rent after their loan payments each month, who find it hard to imagine ever being able to buy a home – will barely feel the relief this policy was supposed to offer. This is especially true for black borrowers.

Ben Miller, currently with the Ministry of Education, wrote in 2019, “This means that borrowers who are in IDR [income-driven repayment] for long periods of time, making low payments will likely see their balance increase. This is particularly worrying because past analyzes have already shown significant differences by race in the share of the original loan balance repaid by borrowers over time.

Additionally, Biden’s goal is to make it easier for people to track their monthly payments by providing an IDR plan that halves the total amount owed. This isn’t the first time we’ve heard the promise that a new income-driven repayment plan will solve this crisis. In any case it has been a broken promise and a spectacular failure. For example, of the 70,300 claims potentially eligible for the income-contingent refund waiver in September 2020, only 157 had been approved as of June 2021.

Adding a $125,000 income cap will leave millions ineligible for cancellation. The income cap was passed to protect against Republican backlash claiming that canceling student debt benefits the wealthy, a claim that has been refuted. This decision ignores the inequities and complexities of financial life in this country by treating anyone earning more than $125,000 as wealthy college graduates who should be able to repay their loans. But income is not the same as wealth. Due to the racial wealth gap, that prevents people from different racial groups from starting at the same starting pointthe introduction of this cap excludes black borrowers who could earn higher income but who have negative net worth (where debts exceed their assets due to systemic racism) and who are much more likely to have members of the immediate family in need of financial support.

expertsand even officials within the Ministry of Education, have warned for months that requiring an application will undermine aid by creating barriers for those who need it most. We have seen this play out with the Public Service Loan Forgiveness (PSLF), a flawed program with a huge administrative burden. Those who work long hours, those who are ill or disabled, older people who are not tech-savvy, and those without reliable internet access will be disadvantaged.

The decision to test the resources of this miserable pardon and reactivate payments in early 2023 is an impending disaster. When Biden announced his cancellation plan last week, the federal student aid website crashed due to large numbers of debtors rushing to find out if they had received Pell grants. Repairers and other bureaucratic agencies are simply not prepared to navigate the nuances of this proposed plan, which strengthens the case for automatic cancellation. Absurdly, the Ministry of Education has not even released the app that borrowers will need to use to begin the cancellation process.

If the president can cancel part of the debt, the president can cancel all the debt. Biden has the power to fundamentally change the life of every borrower, but has refused not to use it to its full potential. (Let’s also not forget Biden’s presidential campaign promised a more robust cancellation – $10,000 for everyone and a full cancellation for anyone who attended public universities or historically black colleges and universities and earns less than $125,000). But despite the limitations of the plan, it nevertheless sets a precedent for future jubilees and marks an important victory for debtors. Presidential administrations and cancellation opponents can never again argue that there is no path to full student debt relief through executive powers.

After the announcement, my mind immediately turned to older debtors who can’t wait years for more cancellations to come. Older borrowers have given the Ministry of Education much of their money — and more than that, they have given up their time, their energy, their dreams. Let’s not put the next generation of Americans in the same fight.

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