WASHINGTON- Cancellation and reparations, two topics that have not been at the forefront of discussion about the twin student loan debt and default crises, surfaced during an event Tuesday presented by the Bipartisan Policy Center, the Consumer Bankers Association and The Aspen Institute Financial Security Program.
More than 45 million Americans together owe nearly $1.6 trillion in student loan debt, with approximately one in five borrowers seriously delinquent or in default. And many of those making payments on time struggle under the burden of payments that sometimes exceed mortgage or rent and that have financed educations that have been a poor return on investment, according to some speakers at an event titled, “Helping Struggling Borrowers and Fixing the Federal Student Loan System.”
In light of that, loan discharge or cancellation is an idea that deserves serious consideration, said Dr. Julie Margetta Morgan, co-founder and executive director of the Great Democracy Initiative and a fellow at the Roosevelt Institute.
Steadily rising loan debt is debilitating particularly for lower- and middle-income families, as the majority of the loan debt is owed by borrowers in households that annually earn $97,000 or less, Morgan said during a panel discussion about relieving the debt burden for current borrowers.
Further, she said, there are “racialized outcomes” evidenced by the facts that Black students borrow at the highest rates and amounts among ethnic groups and have the highest default rates.
U.S. Rep. Dr. Donna E. Shalala, D-Fla., who made keynote remarks prior to the panel, responded to a question about Democratic presidential candidate Sen. Elizabeth Warren’s recent proposal for student loan discharge that would cancel some or all of each debtor’s loans.
Shalala said she could envision combining some loan forgiveness with public service.
“I can sell it to my constituents if people do something for that to occur,” she said. “And public service is one way of doing it.”
