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Student loan cancelation is good first step towards closing racial wealth gap for Latinos

The Biden administration should cancel student debt to free millions from this burden. The new administration has a chance to take executive action to broadly cancel up to $50,000 in student loan debt for borrowers with federal loans.
28 Ene 2021 – 04:33 PM EST
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American student loan debt hit $1.7 trillion in the third quarter of 2020, per the Federal Reserve. Some 42 million Americans owe an average of more than $30,000 in federal student loan debt, according to Crédito: Getty Images

At no point do the challenges and opportunities of the future become as clear to me as when I hear stories like Sabrina Calazans’ from New York.

A recent college graduate with significant student loans, Sabrina was unable to find work because of the pandemic, and eventually moved back home with her family Money was tight but the student loans payments still were due. But thanks to the federal government’s forbearance on all student loan payments her family was able to stay afloat of their finances this year.

As President Joe Biden begins his term in office, I am thrilled that one of the first things he did in office was extend suspension of student loan payments until the fall. I believe the Biden administration now has the perfect opportunity to build on this success by further cancelling up to $50,000 in federal student loan debt, so people like Sabrina don’t start back on square once these halts expire.

Access to higher education has long been hailed as the surest path to the middle class for Latino communities. But today getting a college degree often means taking on dizzying amounts of student loan debts—so much so that nearly one-third of all Millennial and Gen Z Latinos carry student loans in one way or the other. It’s a debt that can remain for decades. According to the Center for American progress, the median Latino borrower with a bachelor’s degree still owes nearly 80 percent of their original student loan balance twelve years after graduation.

These skyrocketing college costs, in addition to the dangers of predatory for-profit colleges, dwindling post-grad employment opportunities, and the seemingly inescapable gravity of generational poverty, are a manifestation of racial inequalities that Latinos face when they try to climb up the economic ladder.

The pandemic has only magnified these economic challenges: A recent survey by Student Debt Crisis, one of the nation’s largest student debt advocacy organization, found that nearly one-third of Latino student loan borrowers had their work hours reduced, and nearly one-in-five had lost their job or were unable to find a job during the pandemic. Latino borrowers were more likely to experience these employment changes during the pandemic than any other ethnic group in the survey. Add to all this the weight of student loans, and the doors for financial independence close quickly.

As part of the CARES Act passed last year, Congress took action and paused all national federal student loan repayments because we knew it would give struggling Americans more spending money in their pockets, allowing families to save more each month while spending more into their local communities.

But this is not a sustainable solution to the crisis we face. A crisis of this magnitude requires bold action.

That is why the Biden administration should cancel student debt to free millions from this burden. The new administration has a chance to take executive action to broadly cancel up to $50,000 in student loan debt for borrowers with federal loans. Senator Warren and I have introduced a resolution in the Senate calling for this action. We have strong support in the House as well, led by Representative Ayanna Pressley and six other House colleagues. Our proposal is simple and it can be accomplished with the stroke of a pen.

One of my priorities for this Congress as Majority Leader is to continue pushing for relief for student loan borrowers, especially those who have been disproportionately saddled with debt. Cancelling student loans can help close the Latino-white wealth gap by 27 percentage points, giving Brown families across the country a far better shot at building financial security.

At the end of the day, this is about basic fairness. The covid-19 pandemic has forced us to reckon with the long-ignored structural inequalities endemic throughout American society. The racial disparities in student loan debt is one of the most serious challenges we have in fighting these injustices.

Tackling the student loan debt crisis will be the first of many steps to provide a critical economic boost that could help not just Latinos, but all Americans, even those without student debt.

The Biden administration must prioritize this relief and help propel our economy forward. It’s the right and smart thing to do.

(New York Democrat Charles E. Schumer is the U.S. Senate Majority leader)