Elizabeth Warren made a similar proposal during her campaign, but the progressives’ plans to nullify the vast majority of student loan debt — $1.75 trillion, a quantity larger than the GDP of Canada — were dismissed as fanciful by many fellow Democrats and outright extremist by their GOP detractors. President Joe Biden was among the skeptics and didn’t come around to the idea of a more modest $10,000 in debt cancellation until the general election the following year. He was still squeamish about the idea of large-scale relief into the early stages of his presidency. “The idea that you go to Penn and you’re paying a total of 70,000 bucks a year and the public should pay for that? I don’t agree,” Biden told The New York Times last spring.
Biden’s tone shifted on Wednesday, however, when he followed through on that campaign promise and announced a plan to cancel nearly $300 billion in student debt. The move forgives $10,000 in loans for anyone who makes less than $125,000 a year, and $20,000 for recipients of Pell grants, which are awarded to low-income undergraduates, who come in under the same line. In one fell swoop, Biden potentially eliminated the outstanding balance of 20 million borrowers — around half of the country’s student debtors.
Progressives may have failed to win the White House, but Biden’s announcement proved that student loan activists and the liberal politicians they championed have succeeded in making student debt cancellation an issue that can no longer be ignored by the Democratic establishment. “This shows we won the fight, and that Joe Biden is the president who can cancel debt,” says Melissa Byrne, a former Sanders campaign staffer and student debt cancellation activist.
The United States spends more on education than almost any other country, nearly double per student than the average developed nation, but the number of American students earning higher education degrees is lagging. Between 1980 and 2020, the average cost of an undergraduate degree rose by 169 percent. According to Bloomberg, student loans are the “fastest growing segment of U.S. household debt,” and are the second largest segment of American consumer debt after mortgages. Over less than two decades educational debt exploded, growing by 159 percent.
Those entering their higher education and careers in the turmoil and aftermath of the Great Recession were deemed the first American generation that would make less than their parents, and have been under a cloud of financial anxiety for much of their lives. In the shattered global economy of the financial crisis, college education became not just a door to long term financial stability, but a virtual requirement in an extremely competitive job market. Prospective students, the children of parents who’d seen $1.3 trillion dollars of wealth vanish in the crash, turned to loans as a way to finance their education. What should have been a temporary stop-gap in a recovering economy has now become the norm.
With tuition at an all-time high, student loans are the devil’s bargain millions of students make in the hopes of achieving the oh-so-promised American dream generations past could afford with a summer job. It shouldn’t be surprising that while debt cancellation is supported to some extent by a majority of Americans, it’s especially popular among millennials and Gen Zers, who collectively hold nearly 40 percent of the $1.75 trillion.
“[Student loans] have devastated credit scores, made it harder to purchase homes, start a business, or pay for childcare,” Sen Michael Bennett (D-Colo.) said in a statement on Wednesday, adding that we now need to “bring down the absurd cost of college.”
The sentiment is echoed across the nation, especially since almost 40 percent of student loan holders don’t actually get their degree. “They earn what a high school grad earns and are trying to pay off college level debt,” Warren said in an interview this spring. “It’s crushing their bones.”
Warnings of the impending debt crisis and calls for relief were raised a decade ago. Barack Obama took actions to ease the burden on some of the 40-plus million Americans saddled with student debt, but the prospect that the president could move to wipe it out entirely didn’t become real until Sanders and Warren made it part of their 2020 campaigns. Each candidate pursued their own strategies — Sanders emphasized universal cancellation while Warren sought a scale of cancelation aimed at racial equity — but together forced the issue of debt cancellation into the national lexicon. It stayed there after Biden was nominated and won the general election, partially on the promise to cancel $10,000 of borrowers’ debt. The wheels continued to turn as central architects of Warren’s plan, Bharat Ramamurti and Julie Margetta Morgan, were appointed to key roles in Biden’s National Economic Council and Education Department, respectively.
Biden making good on his campaign promise was a question of when, not if, according to those familiar with talks. It was simply a matter of stacking it in the queue of priorities — namely, behind the Democrats’ efforts to pass a party-line economic agenda, as the support of moderate senators may have been jeopardized if Biden made his loan relief pronouncement earlier. The touch-and-go nature of negotiations over that legislation led to a few false starts for the debt cancellation announcement, which had been expected in May. Though such delay is often a killer of ambition, time was, in fact, on borrowers’ side: The decision to cancel $20,000 for Pell grant recipients wasn’t made until earlier this summer.
Biden’s move to cancel $10,000 in student debt on Wednesday is a monumental, historic, unprecedented victory for those who sought it, but advocates maintain that elimination of the debt as a whole should continue to be a priority for legislators. “It’s the first step,” as Byrne puts. It’s “a thread that we can keep pulling at,” adds Natalia Abrams, president and founder of the Student Debt Crisis Center. “We know that if they can cancel 10, they can cancel 20, they can cancel 50, they can cancel all of it.”
Those future steps, they add, must also prevent the resurgence of such high sums. “It got started in earnest around 2008, It’s connected to the financial crash,” Abrams says. “Let’s hope that by 2028 it’s completely over, that means free college, that no one’s holding debt,” she adds.
So long as progressives remain in the Senate, they remain intent on seeing that through. Sanders barely paused to celebrate the news of Biden’s impending announcement on Tuesday as he registered outrage over how much money student loan refinancer SoFi had on hand for $103 million in CEO compensation and the naming rights to an NFL stadium.
“You know what President Biden can do?” Sanders tweeted. “Cancel all student debt.”