We are 100 days into the countdown to a crisis of unprecedented proportions.
On May 1st is the expiration of the extension of the moratorium on the payment of federal student loans that benefited more than 40 million students, many of them from racial and ethnic minorities who were the first members of their family to reach university.
The extension was approved by the Biden administration based on a decision the administration made in 2020, in the midst of the COVID-19 pandemic and resulting economic crisis, to give millions of students financial breathing space; and not have to pay on the principal of the interest on their debts.
The figures are alarming. A total of 43.2 million students and graduates have federal debts. Each of these students has an average bill to pay of $39,000 dollars, and their average monthly cost is around $400 dollars. But more than 2.6 million students owe more than $100,000. For the US economy, this represents a liability of 1.75 billion dollars, according to the EducationData.org site.
As usual, ethnic minorities bear a disproportionate weight on the debt issue. A study published last year by the Education Data Initiative (EDI) shows that minority borrowers owe $25,000 more than white borrowers, and that the delinquency rate was 32% for blacks, 20% for Latinos and only 13% for whites.
So it’s entirely reasonable that Democratic senators have reiterated their call for President Biden’s administration to pay off at least $50,000 of student loan debt before the end of the year. Separately, more than 80 House and Senate lawmakers urged the Biden administration to release the Department of Education memorandum codifying the federal government’s authority to write off debt.
Unfortunately, President Biden ruled out the possibility of canceling $50,000 of debt. He did it in a popular assembly, but during his campaign he did offer to cancel up to $10,000 of those debts, although it does not seem that he has devoted enough political capital to the issue in the midst of the pandemic, the economic problems and the possible invasion of Russia to Ukraine.
But in my opinion, this is an issue that deserves presidential attention, since the payment of these student debts represents an onerous burden for many students and graduates who lost their jobs or businesses during the pandemic, and that after a few weeks they will begin to receive invoices for the payment of their debts.
Solving this crisis must be done not only for moral and social reasons, but because canceling it could increase the domestic product of the United States by more than 600 billion dollars in six years, creating 1.5 million jobs and lifting more than 5 million people out of poverty, according to EDI estimates.
Failure to do so is jeopardizing the future of several generations of students and losing a historic opportunity to find a fair and equitable solution that compensates for the costly higher education system in the United States, one of the highest among rich countries.