It’s Not Rich Kids Who Take Out Student Loans. Forgiving Debt Will Boost the Middle Class

This summer President Joe Biden has the rare opportunity to take a single meaningful action that would rebuild the American middle class, help close the racial wealth gap, and restore trust in both the federal government and in higher education: canceling student debt up to $50,000. Canceling student debt would make real the promise of equal access to higher education.

Approximately 7.5 million Black borrowers have student debt, or 30.2 percent of all Black households. Cancellation of student debt up to $50,000 would completely eliminate this burden for 5.5 million of them. The story for Latino families would be even better; debt relief on this scale would eliminate student debt for 81 percent of Latino borrowers, or 4.3 million people.

Debt relief is the only just and moral response to the nation’s student debt crisis, directly combating the enormous economic challenges faced by working people. It would ensure that the vast majority of the country’s 45 million borrowers are debt-free, and address the consequences of decades of mismanagement and abuse that drove a generation to shoulder the burden of college tuition themselves, undermining, in the process, their faith in American higher education as an engine of economic mobility.

And canceling student debt is not only smart policy—it’s smart politics. With the stroke of a pen, the President can cement his legacy as a champion for workers, particularly the first responders, doctors and nurses, fast-food and grocery workers, and educators who have been on the frontlines of our COVID-19 response. The White House can frame this action both as a direct response to the pandemic and a historic effort to rebuild the American middle class from the bottom up.

The move would advance equity across the American economy writ large. A study by the Roosevelt Institute found that universal debt cancellation up to $50,000 would disproportionately benefit low-income borrowers because students from wealthier families rarely use student loans to pay for college.

In generations past, there was a shared belief that an educated citizenry was an advantage for society, and the cost of a college education was largely born by the taxpayers. Over the last 20 years, however, the average cost of tuition at American colleges and universities has risen sharply. One study concluded that in-state tuition at the top public universities rose 211 percent between 2002 and 2022, and now costs the average family more than $11,000 a year. Of course, out-of-state tuition and tuition to private institutions often cost two or three times that amount.

Despite the sharp increase in costs, a college education is still seen as the most reliable way for people to enter or stay in the middle class. So it’s no surprise that more than 45 million Americans currently hold $1.6 trillion in federal student debt, with an average debt of $28,950. More than 21 percent of all households are affected by this burden that frequently builds to a crisis as people are forced to delay buying a house, having children and starting businesses. It’s perverse: The cost of the ticket into the middle class is stopping people from achieving the economic security that is the hallmark of that same middle class.

As members of the union I represent, the American Federation of Teachers, have been forced to learn the hard way, borrowers are set up to fail by a byzantine debt-relief scheme that depends on the existing student loan system and reams of paperwork. President Biden has correctly swept aside red tape across the student loan system, including by promising to fully automate debt cancellation for borrowers with disabilities, military borrowers and federal employees. This approach is a model for how to deliver broad cancellation as well.

Canceling student debt would be a massive financial boost for tens of millions of Americans. More than that, though, it would be a way for the president to accomplish the core of his agenda—building back the middle class, closing the racial wealth gap, and restoring the faith and confidence that the higher education system is there to serve the common good.