On May 1, the federal pause on student loan repayments is set to expire. One of President Joe Biden’s first executive actions exercised his authority granted in the Higher Education Act. As the end of the extension nears, an estimated 44 million student loan borrowers and their collective $1.6 trillion debt will soon be affected.
But a broad and diverse national coalition of more than 140 advocates is urging Education Secretary Miguel Cardona to take a further step: cancel student debt mired in its varied income-driven repayment (IDR) programs. Black borrowers are a vocal part of the effort to eliminate the unsustainable financial burden.
IDR repayment was introduced in 1992 as a way to affordably manage student debt. Beyond reasonable monthly payments, the Public Service Loan Forgiveness program promised that those with years of timely payments could look forward to debt cancellation.
A February 9 letter to Education Secretary Miguel Cardona pinpoints the myriad borrower ills of IDR and urges swift debt cancellation of federal loans.
“To receive debt cancellation under IDR, student loan borrowers must enroll in one of the several income-driven repayment options and remain in that plan for decades,” wrote the advocates.
“To enroll, borrowers must first know about the program, determine which plan suits their needs, submit a litany of paperwork and documentation, and then repeat this process annually for more than two decades.”
Although the Education Department’s own data documents that 4.4 million student loan borrowers have been in income-driven repayment programs for 20 years or longer, only 32 borrowers have successfully had their loans canceled.
Similarly, PHEAA, the nation’s largest student loan servicer found that of its more than 8.5 million customers, only 48 borrowers would receive debt cancellation under IDR by 2025. Moreover, PHEAA’s internal data projects the number of IDR borrowers receiving debt cancellation will decline by 83 percent between 2022 and 2025.
Policy Director and Managing Counsel Persis Yu, of the Student Borrower Protection Center, a member of the national coalition, said, “Without action from this administration, only 1-in-23,000 borrowers will continue to have a chance at cancellation, and that is unacceptable.”
Yu noted further, “The Biden administration can help millions of borrowers and restore trust in this vital program by implementing an IDR waiver.”
“Decades of bad servicing, complicated paperwork and policy failures have broken borrowers’ faith in this program,” said Julia Barnard, a researcher specializing in student loans at the Center for Responsible Lending (CRL) and also a coalition member. “We call on the Education Department under the Biden Administration to make IDR reform an urgent priority in the months ahead.”
The most ardent calls for student debt cancellation come from borrowers themselves, especially current or former Black borrowers whose families already are forced to cope with a nagging racial wealth gap.
With fewer financial resources, many Black families heavily rely on federal financial aid in the form of Pell Grants and federal loans. When those sources of finance are not enough to cover educational costs, parents and/or other family members often borrow Parent PLUS loans to fulfill the unmet costs.
“When we think of student debt overall,” noted U.S. Representative Alma Adams, a former HBCU student and faculty member, “we think about young people. But I have to tell you there are still a lot of older people paying off student loans.”
Adams’ comments are a part of a student debt documentary, “My Yard, My Debt: The HBCU Student Borrower Experience,” a collaborative project by the United Negro College Fund, the Center for Community Capital at the University of North Carolina at Chapel Hill and CRL. Underwritten by the Lumina Foundation, the film draws upon surveys, focus groups and recent related research.
Dr. Katherine Wheatle, a first-generation college student, shared how even today her experience borrowing student loans continues to affect her and her mother, who took out a Parent PLUS loan. From her post as Strategy Officer of Federal Policy & Equity with the Lumina Foundation, Dr. Wheatle explained the remaining student loan challenges.
“It looks different for Black women and women of color,” said Wheatle. “While I may be able to make a similar salary to a white male or white female, my peers and counterparts, my income is being stretched thinner and going very differently than what might happen with my peers.”
For Robert Stephens, a Winston Salem State University alumnus, student debt has delayed his ability to buy a home, build a business, and start a family.
“This pandemic has exasperated people’s ability to take care of themselves…savings have dwindled to nothing… We need help and a great way that is directly in the purview of President Biden is the ability to cancel student debt. Listen to the people on the ground and do it,” urged Stephens.
A related joint policy analysis documents that many people agree with Stephens’ perspective. The Student Borrower Protection Center was joined by CRL and the National Consumer Law Center’s Student Loan Borrower Assistance program in quantified Black support for student loan debt:
• 93 percent support increasing the level of state funding for HBCUs to match funding for predominantly white institutions;
• 91 percent support increasing the amount of the federal Pell Grant;
• 90 percent support automatically adjusting student loan payments based on borrower income; and
• 84 percent of Black student loan borrowers support across-the-board student debt cancellation of $50,000, including borrowers of Parent PLUS loans that are now ineligible.
A November 2021 survey by UNCF and CRL concluded that “federal investment can intervene and help Black students and borrowers succeed and thrive.”
With a wealth of research and borrower testimonials, the policy question becomes ‘when’ or ‘if ’ relief will be granted.
Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at [email protected] responsiblelending.org.