Now, Mr. Biden has signaled that he intends to cancel at least $10,000 worth of student loan debt per borrower, which would, according to the Department of Education, eliminate the balances of 33 percent of all federal borrowers. That still leaves too many in debt, especially among those whose debts have increased since leaving school — based on our analysis, 86 percent of them would still owe money.
Mr. Biden’s proposed income eligibility requirements would also exclude upwardly mobile borrowers with low net worths, including many Black professionals. Worse still, verifying income for debt forgiveness would likely offer false hope of cancellation for millions of low-income borrowers who qualify, as the process, again a bureaucratic gantlet, may very well fail them.
Instead, Mr. Biden must bail out borrowers from the trap of unpayable debts. To do right by at least half of borrowers, he would need to cancel $30,000 per borrower. But to fulfill the promise of higher education, to narrow the racial wealth gap, and to foster an opportunity society, the administration should cancel at least $50,000 per borrower. This would completely bail out 36 million from student debt, according to our analysis, including 67 percent of those who still owe more than they originally borrowed.
A $50,000 bailout per borrower would eliminate only a portion of the $1.6 trillion in outstanding student debt. The government has done fine without collections for two years during the existing repayment pause. And the Department of Education expects that a third of this sum will never be collected anyway.
To protect future generations, Americans need forward-looking reforms for our higher education financing system. Congress should finally pass a proposal that guarantees enough Pell Grants and other debt-free financial aid for any student trying to earn a college degree. Several of these proposals would sensibly cap the tuition and attendance expenses that would otherwise increase in response to another well-intended policy gone wrong.
But unlike these debt-free college proposals, student debt cancellation does not require passage by a deadlocked Congress. Legal scholars say the Higher Education Act gives Mr. Biden the authority to cancel existing student debts by executive order. Doing so will put Congress on notice that it has to act.