The president made student loan forgiveness a cornerstone of his campaign, promising to help lift the burden student debt places on millions of Americans every year. Read more about our transparency and ethics policies But with over 40 million Americans collectively owing $1.7 trillion in student loans, it’s nowhere near enough. To his credit, President Biden to date has canceled $17 billion of student debt. In other words, student loan debt is also preventing people from creating small businesses, jobs for others and generally limiting their spending - all of which impacts the economy.
A 2015 study by the Federal Reserve Bank of Philadelphia found “a significant and economically meaningful negative correlation” between rising student loan debt and falling small-business formation. The negative impact isn’t just felt by the individual borrowers. Given home ownership is one of the best ways to build wealth, these delays only compound the challenges these borrowers face in paying off their loans. A 2022 survey found that 36% of Millennials believe student loan debt is preventing them from buying a home. These financial barriers are causing many to delay many major life milestones, including buying a home and starting a family. Saddled with more student loan debt than any other generation, Millennials also have to deal with lower earnings, rising rental and home buying costs, as well as inflation.
Millennials like myself are also at a particular disadvantage. By contrast, the median white borrower owes 65%. The Student Borrower Protection Center report also found that 12 years after the start of their undergraduate education, the median Latinx borrower owes 83% of their original student-loan balance. The majority of Latinx students go into significant debt - $40,000 or more if they take on a private loan - taking years if not decades to pay off. According to federal data analyzed by the American Council on Education, roughly 70% of Latinx undergraduates come from families in the bottom half of earners and a 2020 report from the Student Borrower Protection Center found that 72% take out loans to attend college. At 17, I had no idea what the consequences of that kind of debt would have on my life. After all my parents had done for me, taking out a loan to help pay for college seemed like the least I could do. The idea of taking on debt scared me but I readily bought into the argument from guidance counselors and loan officers alike: a loan was simply an investment in my future. Even with a job, I had no choice but to take out a loan.
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When it came time to figure out how to pay for my and my family’s dream, I knew my parents would not be able to help me finance it. When I finally got my Berkeley acceptance letter, it felt like the payoff they deserved - it was my way to honor their sacrifice. Because his family could not afford to send him to school, he never had the chance.įor years, I worked hard in school to do what they’d asked of me. It was only then, after seeing fear in my father’s eyes at the prospect of having to take literacy test, that I realized he could not read or write. I never understood why it mattered so much to my parents until 2005, when they applied to become permanent residents. Growing up, college seemed like a luxury, something only for the rich. Through all of it, their message was always the same: make sure you get an education. Occasionally, they’d splurge and take us out for a Sunday dinner at a cheap Salvadoran restaurant in South Gate, near where we lived in South Central Los Angeles. But they did all of that so we had enough to eat and pay the bills. At times, my father’s work kept him away for weeks, leaving my mother to care for me and my siblings on her own. Like many immigrants, my parents sacrificed everything they had to give their children a better life. If the president follows through, it would be a massive relief for millions of Americans, including many in the Latinx community. On Monday, President Biden told the Congressional Hispanic Caucus that he is looking into forgiving most, if not all, federal student loan debt.
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