How Student Loan Forgiveness Could Help Close the Racial Wealth Gap
Democratic congressional leaders pressure President-elect Joe Biden to cancel $ 50,000 in debt for each student loan borrower. Biden, in response, said he would prefer Congress to adopt a more modest relief plan. Either way, the idea sparked a larger conversation about student debt, which is over $ 1.6 trillion in the USA.
Laura Beamer, Senior researcher in higher education finance at the Jain Family Institute, told Texas Standard that she believes canceling student loans is the best way to solve the student debt crisis. This would especially help low income and black borrowers, but also many others.
“Statistically, blacks borrow more [and] borrow more often. And their families also have to borrow on behalf of students more often, ”Beamer said. “With $ 50,000 in federal remission, about 62% of people will be completely debt-free.”
That amount of forgiveness, Beamer says, would also benefit the economy as a whole. This is because unpaid student debt would be less likely to be passed down from generation to generation. And it also allows younger borrowers to use that money for other purposes.
“Obviously, the generational wealth gap, the racial wealth gap type effects are going to be huge here,” she said. “That kind of purchasing power, getting back into the hands of young adults can have huge, huge economic impacts.”
What you will hear in this segment:
– How the cancellation of the student loan relates to the idea of ”moral hazard” and why it is wrong
– How student debt today is different from that of the baby boom generation
– What debt cancellation would cost the country and whether the investment is worth it