President
Joe Biden made a campaign promise to
alleviate some student loandebt, and on
August 24, he honored his commitment. Some
say it is too
little. Obstructionists say it is too much.
Some economists say itmay be inflationary,
and loan defaulters like Congresswoman
Marjorie
Taylor Green, who defaulted on a federal
loan of her own, say it is“not fair” that
some taxpayers should subsidize others. I
say that student loan forgiveness is a step
in the right direction.It is a drop in the
bucket, to be sure, but it is a critical
drop
that makes way for a more insightful
analysis of the cost ofattendance and how
people pay for higher education.
The
headlines have focused that everyone with
federal student loan debtwill get $10,000 of
forgiveness for that debt. Those with Pell
grants
and student loans will get $20,000 in debt
forgiveness. Any amount ofloan forgiveness
is a good thing, but for those who carry six
figures
worth of debt, it’s just a drop in the
bucket. When I wasPresident of Bennett
College, I’d often look at the debt that
some of my graduates were carrying,
sometimes as much as $50,000 or$60,000. Why?
They may have had some grants but had to
take out loans
to cover their cost of attendance. Most
colleges use the interest ontheir endowment
to provide scholarships. Many HBCUs with
small
endowments have less grant money to offer
than richly endowedcolleges.
Before
the pandemic, student loan repayments began
six months aftergraduation. After six
months, interest began accruing. Students
who
did not find jobs still had hundreds of
dollars of loans to repay,regardless of
their employment status. Because interest
continued to
accrue, some students owed more three years
after graduation thanthey did when they
graduated. Nearly half of all Black college
graduates owe 12.5 percent more than they
did when they graduated,mainly because of
accrued interest. In contrast, 83 percent of
white
students owe less. What’s the difference?
Family assistance.Black families have just a
tenth of the wealth of white families.
While
the loan forgiveness amounts are being
trumpeted, I think the moresignificant part
of President Biden’s announcement is the
change in repayment terms and structure.
Currently, loan repaymentsare capped at 10
percent of gross income, with forgiveness
happening
after ten years. The new terms cap
repayments at 5 percent withforgiveness
after ten years. These new terms provide
income
flexibility for millions of borrowers who
postpone adult decisionsbecause of the heavy
burden of student loan debt. Some defer
marriage
and childbearing, new home and furniture
purchases, and even aspectsof career
advancement because of their student loans.
Consider
a graduate with a passion for education. She
is agile in mathematicsand would be a great
math teacher. She could also go into some
aspect
of the finance industry as a bank, broker,
or portfolio manager andearn twice what
she’d make as a teacher. With student loans
crushing her, she might pragmatically choose
finance instead ofteaching. With a little
help, she might follow her first love and go
to the classroom. She might be forced to
choose a lucrative butunfulfilling career
with student loan shackles.
Too
many have raised a “fairness” and
“equity”argument to oppose Biden’s plan.
It’s a done deal, y’all,
and President Biden needs to do more. Let’s
pause and applaudthe Biden-Harris
administration for this step in the right
direction.
And let’s ask those attempting to incite
class warfare aboutthe roots of their
objection. Few Republicans opposed the 45th
President’s tax cuts. Instead, they
applauded them. The rest ofus paid for them.
I didn’t hear the MAGA right lamenting that
most of us were paying for tax breaks for
just a few of us. WhenBlack businesses had
difficulty qualifying for PPP loans because
of
the paperwork load, I didn’t hear
Republicans suggesting thatless-advantaged
companies were subsidizing, through their
taxes,
better-advantaged businesses. Some
multi-million dollar franchisesseeking
relief were shamed into turning their loan
money back. The
equity argument is nonsensical and
deceptive, and for the record,most of the
loan forgiveness goes to people who earn
less than
$75,000 a year.
Thank
you, President Biden, for this drop in the
bucket. May you beinspired to do more,
including examining higher education
financing.
What would it take to make undergraduate
education free for everyone?
