United States House Majority Whip James E. Clyburn (D-South Carolina) and Senator Elizabeth Warren (D-Massachusetts) introduced bicameral legislation designed to eliminate up to $50,000 in student loan debt for 42 million Americans—providing debt relief to 95 percent of student borrowers, including cancelling student debt entirely for 75 percent of borrowers. The Student Loan Debt Relief Act would end the student debt crisis, help millions of struggling families obtain financial stability, and would also take meaningful steps to begin to close the racial wealth gap.
An analysis headed by Professor Thomas Shapiro at Brandeis University in Massachusetts suggests this legislation’s ability to lessen the racial wealth gap for families with student loans would be “formidable”. For those families, not only would the Black-White and Black-Latinx wealth gap close “considerably,” but Black families with student loan debt would see their wealth grow by about $15,700 and Latinx families would see their wealth grow by over $27,000.
Outstanding student loans now total nearly $1.5 trillion in the United States, more than triple the debt young people held thirty years ago. Almost 45 million Americans have student loan debt, and nearly 7.2 million are in default on those loans, as they face stagnant wages and rising costs of living. Black and Latinx Americans face the worst effects of the student debt crisis—with many Black borrowers still owing more than 100 percent of their loan balance 12 years after college, even with a degree in hand.
“Crushing student debt has reached crisis levels in America requiring big, bold solutions,” said House Majority Whip James E. Clyburn. “I’m proud to be working with Senator Warren to provide most student loan holders relief from this daunting burden and make amends for the failure to ensure that higher education is accessible and affordable to all. Post-secondary education should be the springboard to enable students to achieve their dreams not the impediment that prevents the realization of those goals.”
The Student Loan Debt Relief Act, as it stands, would cancel up to $50,000 in student loan debt for every person with household gross income at $100,000 or less. It would also provide an automatic cancellation system based on existing data. Cancelled debt would not be treated as taxable income. Additionally, it would provide a year-long freeze on loan payment, wage garnishment and interest on loans while the cancellation is being implemented. Borrowers would also have the option to refinance their private loans to a federal student loan while also making bankruptcy an option.
“The cost of a college degree is pauperizing an entire generation, and the current debt relief programs in place are being sabotaged by a deeply flawed and broken system that protects loan company profits at the expense of borrowers,” said American Federation of Teachers President Randi Weingarten. “The Student Loan Debt Relief Act is one welcome solution that would give the current generation a chance at financial health upon graduation, regardless of what professions they choose. This bill would release millions of borrowers from their ‘debt sentence’ so they can live their lives, care for their families and have a fair shot at the American dream.”
“The HBCU Collective is elated to see this legislation introduced in the House and Senate. Students from Historically Black Colleges and Universities stormed Capitol Hill a few short months ago asking for this and Senator Warren and Rep. Clyburn heard our call,” said HBCU Collective founder Robert Stephens. “If we can provide a $1.5 trillion dollar tax cut to Wall Street we should be able to help those who live on Main Street.”