At a CNN town hall on Tuesday night, President Biden was asked if he supports the idea of canceling up to $ 50,000 in student loan debt for individuals.
His answer: No. He supports the cancellation of $ 10,000 in debt, he explained. But he said he was wary of wiping out big chunks of loans for people who went to Ivy League schools: “The idea that … I’m going to forgive the debt, the billions of dollars in debt, for people who went to Harvard and Yale and Penn … “
Instead, he explained, he prefers to use that money for other priorities, like early childhood education or free community colleges.
But here’s the problem: Regardless of the larger question of whether loan forgiveness is a good idea, Biden’s comments don’t reflect the true picture of the $ 1.6 trillion owed by federal student borrowers or borrowers. who would benefit most from forgiveness.
Most student loan borrowers does not have attend highly selective colleges, as most students do not go to these schools. People who attend Ivy League schools make up less than 0.5% of the nearly 15 million undergraduates in the United States, and many of them don’t have to take out student loans for do it.
“Misconceptions that higher education graduates all come from elite institutions are pervasive and do not help educate the public about the value of post-secondary education,” says Fenaba Addo, associate professor who studies student debt at the University of North Carolina, Chapel Hill.
Think about it: students who do going to the more selective schools tend to come from wealthy families, and many pay full tuition. Last year, 54% of undergraduates at the University of Pennsylvania, for example, weren’t even eligible for financial aid, according to to school data. At Harvard, the number was 45%.
These highly selective colleges have long struggled to enroll students who are not from the highest level of wealth in this country. A new report shows that, even today, low-income students who qualify for the federal program Pell Grants represent less than 16% of enrollment in many of these schools.
And for the students of these establishments which do need financial help? Many offer financial aid programs designed to keep students free from federal student loans. At Harvard, only 2% of the undergraduate population receives federal student loans, according to the College Scorecard.
Instead of focusing, like Biden did, on who should not get the benefit, we should focus on who would really benefit from a loan discount, argues Jalil Mustaffa Bishop, researcher at the University of Pennsylvania.
He says using the Ivy Leagues to advocate for much lower, if any, debt reduction is misleading: “The idea that modest debt forgiveness or no debt forgiveness is the best way. to be continued because an insignificant number of wealthy people may profit is a topic of discussion to distract, “he says. Households with student debt tend to have the least wealth, according to federal data. People who have struggling to repay their student loans are usually those who have not graduated and have low debts.
“Yes [Biden] is concerned that the rich or the elite will benefit, “Bishop adds, and then there are policy approaches to deal with it:” He can focus on raising taxes on households earning over 400,000 $ as he promised during his campaign ”.
Bishop’s research focuses on the debt burden of black borrowers, who are often the hardest hit by student debt. They face discrimination in the labor market, higher unemployment rates, lower family wealth and other forms of systemic racism.
He argues that the $ 50,000 loan cancellation figure could go a long way in reducing inequalities in a system that both forces black families to take on more debt and have more difficulty repaying those loans.
Addo at UNC-Chapel Hill agrees: “We know that black borrowers struggle to repay themselves regardless of their type of institution and whether or not they have graduated.”
And so his advice for Biden the next time he’s asked about this issue? If you only get three sentences on debt cancellation, she says, “why not recognize that $ 1.7 trillion in debt is a sign of serious problem.”