Center for American Progress
Donate
See all topics
Center for American Progress
Student debt cancellation would help people of all ages, reduce the racial wealth gap, and help borrowers weather turmoil in the student loan system.
Advancing Racial Equity and Justice, Building an Economy for All, Biden Administration, College, Career, and Civic Readiness, Education, Higher Education, Racial Equity and Justice
Senior Media Manager
snadeau@americanprogress.org
Senior Director, Safety and Justice Campaign and Director, State and Local Government Affairs
jparshall@americanprogress.org
Director, Federal Affairs
mshepherd@americanprogress.org
President Joe Biden will likely make an announcement on whether to cancel student debt “by the end of August.” In preparation, the U.S. Department of Education has already outlined plans for implementing this decision, which could amount to at least $10,000 in cancellation for eligible borrowers and families. The Center for American Progress has previously called on the Biden administration to cancel at least $10,000 and urged the president to “use all available data and resources across the federal government to make debt cancellation as automatic as possible.” If the president does cancel student debt, it will be a bold step for the higher education system—and one that could benefit a surprising cross section of people in this country.
Here are five of the most important things to know about student debt cancellation:
Approximately 43 million Americans today hold more than $1.6 trillion in federal student loan debt. These borrowers come from various age groups, political affiliations, and walks of life. The debt burden experienced by these borrowers is the result of a perfect storm of rising college costs, state disinvestment, and insufficient federal financial assistance. As a result, some have had to make tough choices between paying down their student debt and paying for rent, health care, child care, and other basic necessities. If President Biden cancels at least $10,000 in student loan debt, millions of borrowers would receive meaningful relief. Of those borrowers with outstanding federal student loans, an estimated 15 million hold less than $10,000 in student loan debt.
Black students and their families are more likely to need to borrow, borrow more, and take longer to pay off their loans. For this reason, canceling at least $10,000 in student loan debt would be a significant first step in narrowing the racial wealth gap.
While the conversation around broad-based debt cancellation has largely been split along party lines, it’s important to note that debt cancellation is not an entirely new concept. Congress has already created several repayment plans and programs that offer debt cancellation after a certain number of years. However, due to administrative errors and challenges, too few borrowers have actually received expected debt relief over the years. Yet $10,000 in debt cancellation could reach a wider share of borrowers in need of relief and make good on the government’s promise to borrowers that student loan repayment does not need to be a life sentence.
Since the start of the pandemic, the federal student loan system has been in a constant state of flux. Borrowers are confused about what will happen with their loans, and neither the Education Department nor the student loan servicing companies are ready for more than 43 million borrowers to resume payments. Canceling debt now would relieve pressure on the system, give the Education Department more time to implement important reforms, and release millions of borrowers from what is sure to be a difficult return to repayment.
Debt cancellation would help borrowers and the Education Department weather recent disruptions to the student loan system:
At the heart of the debt cancellation movement is the recognition that no one should have to take on debilitating debt to gain access to college and all of its economic and social benefits. Unfortunately, by its nature as a retroactive action, this move cannot, by itself, prevent current and future students from suffering just as much or more under the weight of student debt. As CAP recently detailed, Congress and the Biden administration must seize this moment of extraordinary attention to the student debt crisis to make lasting reforms.
Jared C. Bass, Jesse O’Connell
Student debt cancellation would help Americans of all ages while also improving racial equity. Moreover, it would represent a recognition that higher education cannot function as a path to economic mobility and a more equitable society if it requires students to struggle for decades under the weight of debt without relief. The next step is for policymakers to ensure that current and future students have a better path to opportunity.
The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.
Policy and Outreach Specialist
Senior Director
Senior Fellow
Senior Policy Analyst
Michele L. Jawando, Igor Volsky, Sally Tucker, 2 More Rachel Rosen, Kyle Epstein
Abril Castro
CJ Libassi
Marcella Bombardieri
Jenny Rowland-Shea
Trevor Higgins, Sally Hardin
Akua Amaning
Nicole Rapfogel, Emily Gee
Center for American Progress
The Center for American Progress is an independent nonpartisan policy institute that is dedicated to improving the lives of all Americans through bold, progressive ideas, as well as strong leadership and concerted action. Our aim is not just to change the conversation, but to change the country.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Learn about our sister organization, the Center for American Progress Action Fund, an advocacy organization dedicated to improving the lives of all Americans.
©2022 Center for American Progress
About Author
