Debt Relief Still Feels Out of Reach for Many Students

Photograph by Nathaniel St. Clair

College is expensive — and for most Americans, higher education is still largely unaffordable.

The cost of college continues to rise at rates that salaries and income aren’t keeping up with. This is especially true for low-income and working-class students who must depend on alternative ways to fund their education like grants, scholarships, and — most notoriously — loans.

Students and their parents depend on loans to access college and the economic mobility that comes with it. According to an Urban Institute Study, 70 percent of students who get a bachelor’s degree incur student loan debt by graduation.

Students whose families already have less wealth, including students of color, are especially impacted. And Black women, who struggle to overcome wage gaps at every education level, are more burdened by student loan debt than any other demographic.

First-generation students have a harder time repaying student loans because they have more debt and fewer safety nets in place after college. Additionally, the parents in many low- and middle-income families take out loans to cover the education of their children, creating intergenerational student debt burdens.

During his campaign, President Biden promised to bring Americans relief through widespread student debt cancellation.

He recently announced a new plan aimed at making good on this promise by tackling runaway interest for borrowers who owe more than they originally borrowed, canceling loans for borrowers who’ve been in repayment for two or more decades, automating relief for existing forgiveness programs, and canceling loans for borrowers who were scammed by fraudulent institutions.

Most recently, the administration canceled $6 billion in student loan debt for borrowers who attended and were misled by a former for-profit college group, The Art Institutes.

But while Biden’s plans bring hope for borrowers, many young borrowers aren’t seeing enough relief.

More than half of student loan debt in the U.S. is held by people who belong to the Millennial and Gen. Z generations. Under Biden’s proposed rule, these younger borrowers — who haven’t yet been in repayment for 20 years and who don’t qualify for current Public Service Loan Forgiveness or Income-Driven Repayment Plans — can’t access debt relief.

Biden has signaled that his administration understands this and that he will release a plan to provide relief to borrowers experiencing hardship. This plan will target borrowers at high risk of defaulting on their student loans and families with expenses that make it harder to pay back loans, like medical debt or child care.

As young borrowers wait patiently for the hardship rule to be finalized and to learn exactly what will and will not be included in it, one thing remains clear: Needing student loans to pay for education is a hardship. Borrowers shouldn’t be forced to decide between paying back mountains of student loan debt and reaching other financial milestones like buying a home, saving for retirement, or growing their family.

As we applaud the important strides Biden is making to ensure Americans are no longer stifled by student loan debt, we must remember that the true goal is to cancel all student loans and to ensure younger borrowers get relief until we reach that ultimate goal.

Candace Milner is the racial equity policy associate for Public Citizen.