New economic study ‘busts’ student debt myth repeated by Joe Biden

Social science research group Jain Family Institute’s latest annual student debt report, released on Thursday, belies claims by President Joe Biden – who said earlier this week he would not cancel $50,000 in federal debt student loan per borrower – that such a move would disproportionately benefit people who attend elite private universities.

Young adult borrowers in low and lower middle income communities would receive a disproportionate share of aggregate dollar rebate compared to middle and upper income communities. »
—Jain Family Institute Report

The 2021 Student debt and young America The report, written by JFI’s Laura Beamer and Eduard Nilaj, begins by noting that young people are “overwhelmed by student debt”.

“This crisis is the culmination of dwindling government funding for higher education, stagnating wages, wealth inequality and a misleading emphasis on getting high degrees – all leading to the financial gap between the price of college education and subsequent income,” they write.

“In 2020, aggregate balances reached $1.66 trillion in 2019 dollars, or 122% more in real dollars than in 2010,” the authors continue. “Unsurprisingly, the number of borrowers, the amount they owe, and the number of loans each borrower takes out all increased over the period. In 2019, 18-35 year olds with student loan debt owed almost $35,000 on average by just over $28,000… in 2009. In 2009, there were only $32 million federal borrowers; in 2019, that number rose to 43 million.

The study notes stark racial disparities in student debt, with blacks experiencing both the largest increase over time and the highest median amount owed in 2019, at $20,236. Asian students experienced the worst debt inequality in 2019. Although their median debt was $18,548 that year, their average balance was $38,860.

Critically, the study reveals:

Since low- and lower-middle-income communities experience the worst debt-to-income ratios, they would see most of their income freed up through student debt cancellation. Young adult borrowers in low- and lower-middle-income communities would receive a disproportionate share of aggregate dollar rebate compared to middle- and upper-income communities.

This goes against the implications of Biden’s remarks at a CNN town hall Tuesday night in Milwaukee, where the president said he didn’t want to write off “billions of dollars of debt for people who went to Harvard and Yale and Penn” instead of using “that money to provide l money for the early education of children who… come from underprivileged backgrounds.”

Rep. Alexandria Ocasio-Cortez (DN.Y.), a strong supporter of student debt forgiveness, refuted Biden’s claim by asking “who cares what school someone went to?”

“The case against student loan forgiveness looks more fragile by the day… We can and must do this. Keep pushing!”
-Representing. Alexandria Ocasio-Cortez

“Entire generations of working-class children have been encouraged to take on more debt under the guise of elitism. That’s wrong,” Ocasio-Cortez said. tweeted late Tuesday. “The case against student loan forgiveness looks more fragile by the day… We can and must do this. Keep pushing!”

Speaking about the freshly released JFI study, Beamer tweeted Thursday that she was “waiting for this report to come out to respond to Biden’s ridiculous ‘Harvard, Yale and Penn’ comment” calling it a ‘myth’ that borrowers frequenting elite schools “would benefit massively from forgiveness compared to their peers elsewhere.”

Other progressive politicians and advocates also pushed back against Biden’s remarks. Rep. Ayanna Pressley (D-Mass.) claimed the president could write off student debt “with the stroke of a pen.” Americans for Financial Reform, which called on Biden to forgive $50,000 in student debt per borrower through executive action, on Wednesday decried the proposed $10,000 debt relief per person. by Biden as insufficient.

“Much more than $10,000 in cancellations is needed,” the group said, “to provide the help that 44 million families and the economy need.”

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