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Joe Biden should provide student loan relief to assist the vulnerable

Joe Biden should provide student loan relief to assist the vulnerable
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Joe BidenJoe BidenSenate Democrats negotiating changes to coronavirus bill Rural Americans are the future of the clean energy economy — policymakers must to catch up WHO official says it's 'premature' to think pandemic will be over by end of year MORE has pledged to forgive at least $10,000 in student loans for all borrowers. This would give a tremendous benefit to vulnerable borrowers. Even when their balances are relatively low, the debt is very unaffordable, especially for borrowers in default who have their wages, tax credits, and Social Security benefits seized. Crushing debt payments on student loans threaten their ability to provide for their basic needs.

The resolutions introduced in Congress note the impact that cancelation would have on the racial wealth gap and assist borrowers struggling with historic debt levels to recover with the coronavirus crisis. However, critics denounce broad cancelation as regressive, and they prefer targeted relief focused only toward the most vulnerable borrowers.

But the lack of targeted relief is what makes broad cancelation the most effective policy for ensuring all those who need loan relief will receive it. Efforts to target relief to student loan borrowers have demonstrated this failure. Income driven repayment, the favored method of cancelation of some critics, has resulted in less than 20 borrowers getting cancelation, according to the National Consumer Law Center data.

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The Public Service Loan Forgiveness program has rejected 95 percent of applications. Of 555,000 borrowers noted by the Education Department and the Social Security Administration as eligible for a cancelation given their disability, fewer than 30 percent ever had their debt forgiven. There are still the hundreds of thousands of borrowers who attended Corinthian Colleges who have been waiting for their relief after more than four years. Targeted relief fails to deliver to borrowers who need it.

While high income borrowers will receive some cancelation, the greatest benefit will be for borrowers who are low income minority single parents. With just $20,000 of student debt cancelation, almost 80 percent of the defaulted borrowers would have their entire debt eliminated. Such relief would change their lives, even if it is a drop in the bucket for doctors and lawyers with more debt. Perhaps this is why student debt cancelation has the most support of Americans making under $50,000.

This debate about who deserves relief is a problem. Income cutoffs, for instance, ignore the wide disparities in wealth and access to resources, especially as they relate to the racial wealth gap. As the data has shown, the toxic combination of the racial wealth gap along with the racial pay gap means that black borrowers in particular take on more student loan debt and then have a much harder time paying it back.

Borrowers with graduate school debt, which include doctors and lawyers but also social workers and teachers, are disproportionately black. As the American Association of University Women has noted, “Education is often thought of as a great equalizer, but it does not shield women of color from the pay gap or the wealth gap.” Indeed, many women of color have to face both the racial gap and gender gap. Any more efforts to slice and dice the population leave out borrowers who must be included.

Trying to decide who deserves cancelation ultimately hurts the vulnerable borrowers the most. It should be far more important to provide relief to all borrowers who need it than to prevent it from those who do not. Congress has already delegated the power to forgive student debt for the education secretary, while the president has the legal authority and moral imperative to eliminate the suffering caused by student loan debt with the stroke of a pen. Biden can certainly use that authority on day one.

Persis Yu is an attorney who is the director for the Student Loan Borrower Assistance Project at the National Consumer Law Center based in Boston.