“By forgiving up to $20,000 in burdensome student loan debt, President Biden is giving working and middle-class families the financial breathing room they desperately need. Buying a home, founding a business, starting a family, and so much more will now be a financial possibility for millions more Americans. But we cannot stop there. The Congressional Black Caucus remains committed to achieving additional reforms to ensure current, and future borrowers are not subjected to this cycle of burdensome debt.” — Congressional Black Caucus Chair Rep. Joyce Beatty
In the 1970s, the maximum federal Pell Grant covered nearly 80% of the cost of a four-year public college degree. Today, it covers only a third.
In the 1970s, a student could earn an entire year’s tuition at a public university by working just five hours a week at a minimum wage job. Today, a student would have to work 28 hours a week.
From 1978 to 2012, college tuition rose four times faster than inflation and has risen three times faster in the past decade.
Since 1970, the average student loan debt at graduation has increased 317% when adjusted for inflation.
In other words, this is not your grandfather’s student debt.
Last week, President Biden offered much-needed relief to millions of federal student loan borrowers. With the stroke of a pen, he is forgiving $10,000 in federal student loan debt for those making under $125,000 a year. One in four Black borrowers would see their debt cleared entirely under the president’s plan. Pell grant recipients, who are twice as likely to be Black, are eligible for an additional $10,000 in relief.
The extra relief for Pell Grant recipients is responsive to the National Urban League’s call for an approach that recognizes these borrowers often owe more and for longer periods.
According to a Brookings Institution report, Black college graduates owe an average $7,400 more than their white peers upon graduation. Four years after graduation, they owe an average $52,726, compared with $28,006 for the average white college graduate, according to the report, which included nonborrowers in the average. About two-thirds of Black borrowers owe more than they originally borrowed 12 years after starting college.
President Biden’s plan also extends the moratorium on federal loan repayment until the end of the year and takes other long-term steps to ameliorate the college debt crisis for all.
Student debt stands in the way of entrepreneurship, homeownership, and even the day-to-day purchase of necessities. But it’s not just bad news for the borrowers. It’s bad news for all Americans. A surprising one out of every five recipients of food stamps (SNAP) holds a postsecondary degree. An even higher percentage of Medicare enrollees — nearly one in four — hold postsecondary degrees.
While only a first step, the president’s actions will put borrowers one step closer to the financial freedom needed to purchase a home, save for retirement, and build wealth for themselves and their families. But we can do better.
Canceling $50,000 in student debt for households with income below $100,000 would increase Black borrowers’ wealth to from 5% of white borrowers wealth to 33%, while increasing forgiveness to $75,000 in forgiveness would raise it to 42%.
Congress must work on a long-term strategy for student loan debt relief for existing borrowers and reducing the cost of college for current and future students.
The National Urban League stands ready to work with Congress and the White House to make college more accessible and affordable for all.
Morial is president/CEO of the National Urban League.