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Local leaders build pressure on Biden to cancel student loans

Local leaders are stepping up the pressure on President BidenJoe BidenPutin says he's optimistic about working with Biden ahead of planned meeting How the infrastructure bill can help close the digital divide Biden meets Queen Elizabeth for first time as president MORE to tackle the issue of student debt by taking official action in their own jurisdictions that they hope will urge him to forgive some college loans.

The District of Columbia and several other city governments have passed resolutions that call on the federal government to act on student loan cancellations. The moves come as Biden laid out new measures toward economic equity this week, an issue that student loan advocates say could be tackled in part by canceling student loans.

The resolution D.C. passed on Tuesday unanimously urges immediate attention from the federal government and to “begin the transition to education as a public good,” outlining how student loans impact the District’s residents.

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“Student debt is a contradiction in terms. Students should not have to accrue debt to be educated, and education should be a public good. The student debt crisis hits communities of color, women, and low-income families hardest  both in the District and across the United States,” said D.C. Councilwoman Janeese Lewis George, who introduced the resolution.

The Boston City Council passed a resolution in April that calls on the federal government to cancel all student loan debt, saying it's a “burden” that disproportionately impacts communities of color. A resolution passed by Philadelphia’s City Council in March specifically called for Biden to cancel student debt within his first 100 days in office, which elapsed in April.

Cambridge, Mass.; Somerville, Mass.; and Watsonville, Calif., have taken similar steps.

Biden’s speech on Tuesday to mark the Tulsa Race Massacre centennial unveiled a plan to drive racial equity throughout the country by expanding and targeting federal purchasing power to benefit more minority-owned businesses. He didn’t discuss student loan forgiveness during his remarks, which the NAACP has criticized the president for.

NAACP President Derrick Johnson said in a statement that student loan debt suppresses Black Americans.

“You cannot begin to address the racial wealth gap without addressing the student loan debt crisis. You just can’t address one without the other. Plain and simple,” Johnson said.

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When questioned about Biden’s interest in tackling student debt, the White House has pointed to Biden’s budget proposal, unveiled on Friday, which includes two years of free community college and an increase in Pell grants.

The American Families Plan, the second part of Biden’s sweeping infrastructure package, includes $46 billion in investments for Historically Black Colleges and Universities, as well as tribal colleges and universities and other minority-serving institutions — another point the White House has touted.

“He makes two years of community college free, along with a major increase in Pell grants that will drastically reduce the cost of an education beyond high school,” White House press secretary Jen PsakiJen PsakiBiden, Macron huddle on sidelines of G7 summit Biden to host Germany's Merkel at the White House in July Psaki 'likely will stay longer' than year as White House press secretary MORE said Wednesday when asked about the absence of student loan forgiveness in the president’s new racial equity plan.

Biden has promised to try to cancel up to $10,000 per borrower, but the White House has said no decision has been made on whether the president can take unilateral action to cancel some student loan debt after it requested information from Education Secretary Miguel CardonaMiguel CardonaLocal leaders build pressure on Biden to cancel student loans COVID relief vital to successful reopening of schools Judge ruling upholds Connecticut school mask mandate MORE on the president's legal authority to do so back in March.

The Education Department has also not yet released an update on the information the White House requested.

Despite appearing to have decently firm footing to relieve student debt through executive action, Biden has made it clear that he’s not willing to forgive more than $10,000 per borrower, balking at the $50,000 per borrower that progressives have pushed.

However, even the $10,000 proposal was omitted from his equity plan.

Tulsa was not the first time Biden left out the subject of student loan cancellation from a major speech. He also did not mention it during his first joint address before Congress in April, which advocates also criticized. 

“Student loan debt has become a crippling burden for millions of Americans. At the Department, we are committed to providing support for student loan borrowers by pursuing relief options. We are working closely with the Department of Justice and the White House as quickly as possible to review all options regarding student debt cancellation,” an Education Department spokesperson told The Hill. 

Due to the lack of action from the administration, advocates are forging ahead with a different route  by putting on the pressure via local leaders. 

Debt Collective, a membership-based union for debtors and allies, has worked with cities to get these resolutions, like what passed in D.C. this week, through its councils.

“Student debt is too often framed as an individual problem. In reality, it harms society as a whole. Student debt is a $1.8 trillion dollar weight dragging us all down, and one Biden can eliminate with a signature,” said Braxton Brewington, a Debt Collective spokesperson.

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“We're working with municipalities across the country to pass bold resolutions to underscore the fact that mass cancellation would help communities struggling in the wake of a devastating pandemic by providing a much needed economic boost,” Braxton added. 

The White House didn’t respond to a request for comment on the city resolutions that have passed.

Like many other advocate groups on the issue, Debt Collective stresses that debt cancellation is a racial justice issue.

“The cities that have passed resolutions, or will introduce them soon, are uniquely representative of the people disproportionately struggling with student loans — namely Black and brown households with high average loan balances and high debt-to-income ratios,” Brewington said.

While it’s unclear the exact percentage of student debt that Black and other borrowers of color hold, other data points support activists’ and progressives’ claims.

A 2016 study from the Consumer Financial Protection Bureau found that 66 percent of white students take out federal loans when trying to pay for college, while 72 percent of Latino students did the same. The figure is even higher for Black students, with 90 percent taking on federal loans to make college a reality.

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In 2019, the Federal Reserve Bank of New York released a report that looked at the default rate of ZIP codes around the country. Majority-white ZIP codes had a default rate of 9 percent, but ZIP codes that were either majority-Black or Latino had higher rates — 17.7 percent and 13 percent, respectively.

Moreover, the same year, Brandeis University’s Institute on Assets and Social Policy reported that “twenty years after starting college, the median debt of White borrowing students has been reduced by 94 percent—with almost half holding no student debt—whereas Black borrowers at the median still owe 95 percent of their cumulative borrowing total.”

To believe that student loan forgiveness wouldn’t be a driver of racial equity is a false assumption, Mike Pierce, director of policy and managing counsel at the Student Borrower Protection Center, told The Hill.

“There's this snowball effect that happens when you have a high student debt burden, it makes everything else in life more expensive,” Pierce said, citing more expensive mortgages and higher interest rates on credit cards and other financial services.

In particular, home ownership is one of the best examples of the racial wealth gap in the country. For most Americans, buying a home is the largest purchase they’ll ever make and is considered one of the best ways for people to accrue equity.

The home ownership rate for Americans at the end of 2020 was 65.8 percent, according to the Census Bureau. But the average rate for white Americans — 74.5 percent — was significantly higher than the average rate for Black Americans, only 44.1 percent.

“If we're going to have a national conversation about racial and economic justice and we're going to center the financial needs of communities of color, particularly Black people, you can't escape the effects of student debt on the household balance sheets of Black families,” Pierce said. “That is a core part of the economic injustice that's facing America right now.”