I felt fortunate back in the early 2000s when I received my financial aid package, enabling me to pursue my dream college. Like many of my peers, I was raised to believe that obtaining a college degree was essential for securing a “good” job. As a Black woman, attending college seemed like my only option. The real challenge during my senior year was figuring out how to afford my education.
While the narrative around the necessity of a college degree is beginning to shift with the resurgence of vocational schools, many of us who bought into that original belief find ourselves burdened with overwhelming student loan debt. As reported by CNN, over 45 million Americans are grappling with student loans, and I’m one of them. If the Biden administration were to cancel the staggering $1.6 trillion in student loan debt, families like mine could finally start building wealth.
The upcoming bill from Biden is anticipated to forgive up to $50,000 in student loans for individuals who attended public colleges and earn less than $125,000. According to the Huffington Post, nearly 92% of student loans are backed by the federal government, with the rest provided by private financial institutions. The federal government has a significant stake in this debt. When borrowers make interest payments, that revenue goes back to the government. If student loan debt were canceled, the pressing question arises: how would the deficit be addressed? However, it’s worth considering that alleviating this burden could inject much-needed funds back into our economy. This is one crucial way the Biden administration can work towards healing the nation.
A report from the Roosevelt Institute in August 2020 indicated that forgiving just $20,000 in student loans could free half of all households from debt. A $40,000 forgiveness could eliminate debt for 75% of borrowers. This move would also help address glaring racial disparities. The report highlights that federal student debt policy has perpetuated and worsened the racial wealth gap. Black students often graduate with more debt and struggle to repay it, a gap that continues to grow. A 2019 study found that 20 years post-repayment, the median white borrower had paid off 94% of their student debt, while the median Black borrower still owed 95%.
Canceling student loan debt would allow individuals to pay off their mortgages more rapidly, turning their homes into assets rather than liabilities. It could also help those who struggle to save for a down payment due to high student loan payments. According to a survey by the National Association of Realtors, student debt delays homeownership by an average of five to seven years. Chief Economist Lawrence Yun noted that home sales could potentially rise by 300,000 annually if borrowers weren’t encumbered by large debts.
The benefits extend beyond potential homeowners to aspiring business owners as well. Student loan debt impacts a person’s ability to access credit for household expenses, including mortgages or starting a small business, which are crucial for economic growth and wealth creation.
Moreover, canceling student loans would allow people to invest more in their communities. With fewer financial obligations, individuals could contribute to charitable causes they care about.
On a personal level, the mental health ramifications of carrying such debt cannot be overlooked. The anxiety that accompanies substantial debt can be overwhelming, as I can attest. My student loan balance is nearly equal to my mortgage, which adds to my stress. If this debt were canceled, I would feel a sense of relief and my anxiety would diminish.
This burden doesn’t just affect me; it weighs heavily on many families, contributing to anxiety and depression. Research has shown a strong correlation between debt and mental health issues, with individuals experiencing depression and anxiety being three times more likely to be in debt. For some, the weight of financial obligations can be unbearable, compounded by feelings of shame.
Forgiving a large portion of student loans would inspire hope for families, signaling that brighter days are ahead. The Biden administration, which campaigned on the promise that “our best days still lie ahead,” could make a significant impact. For families like mine, managing an additional $300 payment each month for a degree obtained two decades ago would mean more than just one less bill. It would pave the way to building generational wealth for our children, allowing us to truly live instead of merely surviving to pay off student loans.
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Summary:
The call for President Biden to cancel student loan debt is urgent and essential. With millions of Americans struggling under the weight of $1.6 trillion in student loans, debt cancellation could facilitate wealth-building opportunities, address racial disparities, and significantly alleviate mental health issues. The potential economic benefits are vast, making this a vital step toward healing and progress for families across the nation.
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