President Joe Biden recently released his student loan forgiveness plan aimed to help current and former students in higher education. The plan attracted political controversy, but its social impacts cannot be overlooked.
The student loan forgiveness plan will forgive $10,000 of debt for individuals who earn less than $125,000 and families who earn under $250,000 annually. Students who have received a Federal Pell Grant — which demonstrates particular financial aid need — will be eligible for loan forgiveness up to $20,000.
Economists have already begun to debate the costs and benefits of Biden’s plan on the market and national economy. Republicans also voiced their outrage over the proposal.
“Biden’s reckless, unilateral student loan giveaway is unfair to the 87 percent of Americans without student loan debt and those who played by the rules,” GOP Rep. Vern Buchanan said.
Setting aside the economic and political impacts of Biden’s proposal, it is important to examine the social impacts of student loan forgiveness. More specifically, what groups will benefit the most — and are they the ones who actually need help?
First, it is crucial to examine student loan forgiveness under the context of our current situation. The United States has always been one of the poorest developed countries in terms of socioeconomic mobility. Put simply, social mobility refers to the relative ease with which an individual can move between class or economic status throughout their life.
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According to an article in The Guardian, a child in the U.S. inherits approximately 50% of their parent’s income position. By contrast, this percentage is closer to 20% in countries like Norway and Canada.
On the other side of the spectrum, only 8% of people in the U.S. who were raised in the bottom 20% were able to climb to the top 20% in their lives. This percentage is nearly doubled in Denmark, with 15% of children achieving this upward mobility.
Not only is mobility in the U.S. extremely limited on both sides of the spectrum, but certain regions and social groups are affected by this phenomenon more than others.
The PNAS Journal found that low-income children raised in the South faced particularly extreme constraints on upward mobility throughout the 1900s. Those who were born under the 25th percentile often failing to exceed the 40th percentile over the course of their lives. The South has historically seen the highest concentration of Black residents compared to the rest of the U.S.
Higher education and student debt are two of the biggest factors that determine the range of mobility one will experience throughout their life. The Pew Research Center found that graduating from college with a four-year degree can drastically improve upward mobility in both class and economic status. The more selective the college, the higher chance a person has of exceeding their current socioeconomic status.
The issue with our country’s current college system lies in the cost of attendance. The U.S. has some of the largest price tags for college tuition and fees in the world. This has led to many families and students reconsidering their options, especially in recent years.
A recent survey found the number of high school students expecting to attend college has decreased by almost 20%. Nearly 98% of families and individuals said some form of financial aid would be necessary to make college attendance possible.
Due to the additional barriers to employment and historically lower-paying job opportunities Black individuals face, higher education is far less achievable. Thus, our country is facing a self-perpetuating cycle in which poverty begets poverty, higher education becomes increasingly unattainable for the lower classes and people of color continue to see less opportunity than white people.
Our current situation is unsustainable, discriminatory and in dire need of change. It is from this context that we must now examine President Biden’s student loan forgiveness plan.
First, there has been debate over what groups will benefit the most under the Biden administration’s proposal. Some believe Biden’s promise to forgive a portion of individual student loans will affect people of color’s debt balance more than those of white people.
Approximately 71% of Black students take out a student loan over the course of their college career, compared to 56% of white students. Black graduates also owe more on average than white graduates, by about $25,000.
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This being said, others argue the plan’s benefits will not be felt by those who need it the most. A study done by the Penn Wharton Budget Model found that between 69-73% of the debt forgiven will have been accrued by those within the top 60% of the income distribution, despite the plan’s cap on wage earnings.
Why might this be the case? On average, Black students make up a significantly lower percentage of college classes than white students. In a study conducted in the fall of 2019, Black students made up only 12.7% of the undergraduate population and they were not equally represented across different types of universities.
For example, only 15% of Black students attended a highly selective university and only 8% attended an elite research institution. According to the University of Wisconsin System, only 2.3% of UW-Madison students enrolled in the fall 2021 semester were Black.
Thus, Black students and other students of color have consistently faced lower college participation rates than white students, as well as higher dropout rates. Financial pressures are one of the primary reasons for this education gap.
It is clear student debt is a big problem in our country and Biden’s student loan forgiveness program is most certainly a step in the right direction. But, there are still too many students — particularly Black students and students of color — who are choosing not to attend university because of the financial burden they might face. This is why baseline tuition rates and attendance fees must be lowered in the U.S., and why more resources directly aimed at helping students of color get to four-year colleges are crucial.
More must be done for students of color. Debt forgiveness is not enough to close the education gap we are seeing across the country, nor is it enough to increase social mobility for people of color. If student loan forgiveness is to help individuals of all races and ethnicities equally, there must first be equality in our school system at large.
Fiona Hatch is an undergraduate studying political science and international studies.
