A Pathway to Racial Equity: Student Debt Cancellation Policy Designs

Abstract

Student debt in the United States has had a disproportionate negative impact on black and Latinx borrowers. We argue that analyses of plans proposing student debt cancellation should therefore foreground their potential impact on racial equity. To do so, we use data from the 2019 Survey of Consumer Finances and model the impact of debt cancellation on four key policy outcomes (reach, impact on the most vulnerable borrowers, borrower wealth gains, and impact on racial wealth gaps). We examine universal policy designs as well as designs that incorporate an income eligibility threshold as a means of targeting benefits toward less affluent borrowers. We find that cancellation amounts ranging from $50,000 to $75,000 yield the most desirable outcomes, especially when paired with a relatively low household income eligibility cutoff at between $100,000 and $150,000. Such policies would cancel roughly half of all outstanding student debt without substantially expanding the racial wealth gap, while still reaching a large majority of borrowers and leading to substantial wealth gains, especially for black households.

Like Any Other Trap: The Circuitous Path of Student Loan Repayment

“…The standard repayment plan could also enroll borrowers directly into presumably more-advantageous IDR plans, although these plans can also be mismanaged, leave borrowers facing long repayment terms, and not deliver on their promised balance forgiveness (National Consumer Law Center, 2021). More ambitious reforms can range from the numerous proposals for broad-based loan forgiveness (e.g., Charron-Chenier et al, 2020; Goldrick-Rab & Steinbaum, 2020) to tuition-free public education financed by government investments, although such reforms seem unlikely in the current political environment. As to institutional accountability, these findings add to the numerous critiques of the current CDR standards, which ignore the intensity and duration of default as well as the other negative loan outcomes that borrowers may experience.…”

“Not Nearly as Bad”: Social Comparisons and the Debt Experience

“…If borrowers understand debt management and repayment as an individual obligation, it is conceivable that they may view other borrowers as irresponsible, or less worthy of support. Despite recent student loan forgiveness which will likely reduce the racial wealth gap and have a host of other positive outcomes (Charron-Chénier et al 2020; Eaton et al 2021), some degree of student debt, especially for graduate students, will remain (Cowley and Kanno-Youngs 2022). In addition to studying the distribution and consequences of debt, it is important to attend to the ways in which borrowers make sense of their debt and the indebtedness of their social networks.…”

Introduction to the Special Issue—A Class of Our Own: Teaching Sociology by, for, and about First-Generation and Working-Class People

“…Higher education is still commonly seen as the mechanism through which people from FGWC backgrounds can best attain upward mobility, but rising tuition costs and ever-increasing student loan debt reveal that the costs of college can deepen, rather than relieve, social inequality (Gannon 2020; Seamster and Charron-Chénier 2017). Those from FGWC backgrounds are reevaluating the costs and benefits of pursuing higher education (Basaldua 2023; Charron-Chénier et al 2022; Francis 2022; King et al 2020; Orphan 2018). For students from FGWC backgrounds who attempt higher education, the opportunity also entails personal costs and burdens (Hinz 2016; Hurst 2010; Lehmann 2013; Warnock and Hurst 2016).…”