On the afternoon of April 13, 2021, Massachusetts Senator Elizabeth Warren held a hearing on the topic of debt cancellation for student loans.
“America is facing a student loan time bomb that, when it explodes, could throw millions of families over a financial cliff,” Warren said. “The average borrower will have to start paying nearly $400 a month to the government instead of spending that money out in the economy.” She went on to point out the unequal burden across racial lines. Black borrowers, largely due to generational poverty, take out more in student loans than white borrowers, and are less able to pay them back in a timely matter.
“Before the COVID-19 public health crisis began, student debt was already a drag on the national economy, weighing heaviest on Black and Latinx communities, as well as women,” said a letter to the White House, used in the hearing and cosigned by more than 415 organizations, including the ACLU and the American Psychological Association.
“Administrative debt cancellation will deliver real progress on your racial equity, economic recovery, and COVID-19 relief campaign priorities.”
Warren urged President Joe Biden to take the broad, radical step of debt cancellation for hundreds of thousands of extant student loans, forgiving the loans through administrative fiat. Biden did promise in his campaign to address the crisis of student debt, though he did not allow himself to be pinned down on precisely how. On his first day in office, he extended the COVID-19-related pause on federal student loan repayments, and has enthusiastically supported forgiving up to $10,000 per borrower.
Student debt today in the United States is over three times what it was in 2004, before the first effects of what would become the 2008 financial crisis. The average student loan debt in the US, as of 2019, was over $32,000, with as many as 25 percent of all debtors in default.