Yesterday, the Biden administration took a bold first step to tackling the $1.7 trillion student debt crisis in this country by providing limited student debt cancellation. Already, borrowers and advocates are asking important questions for clarity on process and eligibility. Here’s what we know so far:
This action will be transformational for more than 20 million Americans who owe up to $20,000 or less. However, as we detail in How Student Debt Harms Black Borrowers Mental Health, “One year after completing their bachelor’s degree, Black borrowers owe $39,043, on average, in principal and interest.” So, while we applaud the administration for taking action, more needs to be done. Ed Trust advocates for cancelling at least $50,000 of student debt and removing income caps altogether. Recent research found that “Black and Hispanic households would lose out disproportionately relative to White households with such an income cap.”
What’s more, to help current and future college students, the administration needs to address affordability more comprehensively by doubling the Pell Grant and making college debt free by creating a federal/state partnership. Congress should also take action and pass Senator Schatz’s Debt-Free College Act (S. 1263), which would ensure that future students to do not have to take on debilitating debt to attend college any more.
As the ED implements this action, important questions arise regarding function and eligibility:
While we should celebrate the victory that many have long advocated, the work is far from done. We need to continue to push for debt-free college and additional reforms and cancellation to ensure that the student debt burden that can be detrimental to borrowers’ mental and financial health is addressed and that college students don’t end up in this predicament again.
By: Wil Del PilarTitle: What You Need to Know About Student Debt CancellationSourced From: edtrust.org/the-equity-line/what-you-need-to-know-about-student-debt-cancellation/Published Date: Thu, 25 Aug 2022 19:54:50 +0000